Isle of Capri (ISLE) posted strong FQ3 15 results in late February, which solidly beat both the Zacks Consensus Earnings and Revenue estimates for the second consecutive quarter.  The positive results were attributed to low oil prices which enabled consumers have more disposable income to direct towards leisure activities like entertainment and gambling.  

This Zacks Rank #1 (Strong Buy) company is a developer, owner and operator of branded gaming and related lodging and entertainment facilities in growing markets in the U.S.  The company wholly or partially owns and operates gaming facilities under the name Isle of Capri.  In addition, wholly owns and operates a pari-mutuel harness racing facility and owns interests in and operates gaming activities aboard cruise ships.

Increasing Estimates

The table below shows the historic EPS surprise and subsequent Price movement.  As you can see the recent beats have caused the stock price to grow over the past four earnings announcements.

Further, due to their strong performance and improving fundamentals, FQ4 15 and FY 15 have seen EPS estimates increase over the past 7 days; FQ4 15 increased from $0.36 to $0.40, and FY 15 rose from $0.40 to $0.54.  These increased levels reflect improving fundamentals in the regional gamming segment even when you take out the cold weather comparisons.  

Positive Earnings Surprises

Last quarter Isle of Capri destroyed the Zacks Consensus Estimate of $0.00 by posting earnings of $0.13.  The stock jumped up over 19% due to the strong earnings numbers.  Further, this company has a strong history of beating the Zacks Consensus Estimate and has posted an average positive earnings surprise of 71.5% over the previous three quarters.  

Company Data

Net revenues have increased 7.5% quarter over quarter, while adjusted EBITDA rose 27.6% quarter over quarter.  Further, all major properties showed net revenue increases quarter over quarter:  Black Hawk up 4.1%, Pompano up 9.7%, Iowa up 6.1%, Lake Charles up 3%, Mississippi up 7.5%, and Missouri up 8.7%.

Bottom Line

Regional gamming trends continue to improve with the suppression of oil prices remaining a positive tailwind for the leisure segment as a whole.  This trend is expected to continue into the second half of 2015 which will be accretive for the company.

Note: Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ISLE OF CAPRI (ISLE): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research