Thursday, July 31, 2014

AMC: Mixed Q2 results; remain 'neutral' on the stock ...

AMC reported mixed Q2 results; beating on the bottom-line, but missing the top-line consensus by $12.5MM.  We remain 'neutral' on the stock and value it at approx. $26/sh based on a 5-year DCF and the Company's share of NCMI. 

The Company reported Y/Y decline in admission and concession revenues, which is mainly due to lack of blockbuster content, along with the World Cup, driving attendance figures down sequentially and Y/Y.  We think Q3 and certainly Q4 will be slightly better mainly due to better movies hitting the theatres.  

Admission revenue per patron (or the average ticket price) increased to $9.55.  For the year, we have assumed a $9.50 average ticket price.  Concession revenue per patron was $4.22 during the quarter.  We have assumed $4.09 for the year.  With better than expected adj. EBITDA margin of 18.1% (versus last year's 17.7%), we think the Company can lower its prices temporarily to drive attendance higher.  However, again, content is king, and is the main attendance driver. 

The stock was down 5% in AHs.  We think it may become attractive if it dips below $18/sh and/or as we get close to the EOY, as 2015 box office guesstimates are a bit higher than this year's.  We continue to rate AMC 'neutral'.  We initially discussed AMC and some other movie theatres on 3/21.

No comments:

Post a Comment