Cinema operator AMC Entertainment Holdings (AMC) is set to unveil its Q3 earnings later this week. Should investors be cowering behind the big screen or will the results deserve several rounds of applause?
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What Wall Street Expects
Wall Street is expecting that AMC will report a quarterly loss of $0.17 per share in its Q3, which will mark a year-over-year decline of 325%. It is anticipated that revenues will amount to $1.24 billion, which will be down 8.1% compared to the year-ago quarter. Is AMC likely to beat these earnings estimates?
As seen below, it has a mixed recent record when it comes to outperforming expectations.
Key Issues Ahead of Earnings
In Q2 AMC reported some top of the bill-like figures. Global attendance increased by 25.6% compared to the same period last year, with nearly 63 million guests. Revenue also saw a substantial rise, up 35.6% year-over-year, driven by a robust box office performance and strategic marketing initiatives. This revenue growth contributed to an impressive 391.4% increase in adjusted EBITDA, reaching $189.2 million, which was nearly five times the previous year’s figure.
However, increasing economic uncertainty and faltering consumer confidence are likely to provide Q3 figures with a bad review. Admissions revenue is expected to drop sharply due to lower ticket sales and pricing pressure. Food and drink sales are also tipped to lose their fizz due to reduced customer numbers and lower spending on non-essential items. Demand for premium seating is also likely to see a drop in demand.
AMC is also continuing to see intense competition from streaming service providers, especially in the chillier months when people prefer to stay at home. Although investors may want to hear more about the relationship between AMC and Netflix (NFLX).
During Halloween AMC played Netflix’s most-popular movie in its history, KPop Demon Hunters, at its approximately 400 AMC screens across its theatres in the U.S. and Europe. While the two companies have not had a commercial relationship in recent years, both Netflix and AMC are apparently “intrigued by the mutually beneficial opportunities that could arise from this and future collaboration.”
AMC is also being talked about as being a meme stock grabbing investor attention right now. AMC stock is down 35% this year, so will less than star-like results add to or diminish the frenzy?
Is AMC a Good Stock to Buy Now?
On TipRanks, AMC has a Hold consensus based on 1 Buy, 5 Hold and 1 Sell ratings. Its highest price target is $4.50. AMC stock’s consensus price target is $3.40, implying a 31.78% upside.
