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AMC Stock Slides Despite Strong Earnings

AMC stock fell 1.8 percent even after the company beat on earnings and reported healthy revenue growth.

Lucas Hahn
    Aug 01, 2018 2:02 PM  PT
AMC Stock Slides Despite Strong Earnings

AMC Entertainment Holdings Inc. (NYSE: AMC), a cinema chain controlled by the Beijing-based Dalian Wanda Group, saw its stock fall 25 cents today to $16.05 despite beating on earnings.

Revenue for the quarter ended June 30 rose 20 percent year-over-year to $1.44 billion, setting a second-quarter record for the company. AMC reported $22.2 million in earnings, or 17 cents per diluted share, up from a $176.5 million loss in the second quarter of 2017.

According to Zacks Investment Research, Wall Street analysts had expected 12 cents per share in earnings and $1.43 billion in revenue.

"Obviously we are very pleased by AMC's record results for the second quarter of 2018, especially given the magnitude of the impressive 20.0 percent increase in total revenues and an 80.3 percent year over year growth in Adjusted EBITDA for AMC," said Adam Aron, the company's president and CEO said in a statement.

U.S. revenue rose 24.5 percent while international revenue increased just 6.2 percent. Aron explained during the earnings call that international revenue could have been hurt by "beautiful weather across Europe" and the FIFA World Cup.

Aron was pleased with AMC's adjusted U.S. EBITDA margins, which increased to 19.7 percent from 12.7 percent.

Aron also noted the success of the company's loyalty program, AMC stubs, and that AMC opened a movie theater in Saudi Arabia, a country where cinemas had been banned for 37 years. AMC will pay a 20 cent dividend on Sept. 24 to stockholders of record as of Sept. 10.

Some observers were pessimistic about the industry's prospects, since Bloomberg reported in January that movie theater attendance in the U.S. and Canada had dropped to a 25-year-low in 2017. Aron, however, concluded by declaring that "it is finally time for the sky-is-falling-in cynics to admit that they misinterpreted a brief slump in moviegoing last summer. Our industry is flourishing and strong, and the prospects for AMC are enormously bright."

"I'll predict that 2018 will also be a record year for AMC. What's more, as we look at 2019 we see another compelling movie slate and another superb year in our immediate future. The medium-term and long-term prospects for AMC are incredibly bright," Aron added during the earnings call.

With over 1,000 movie theaters and nearly 11,000 screens in the U.S. and Europe, AMC is the world's largest cinema chain. AMC was founded by the Dubinsky brothers in 1920 and is headquartered in Leawood, Kansas.

AMC is controlled by the Dalian Wanda Group, China's largest commercial real estate firm, which was founded in 1988 by Jianlin Wang. The Wanda Group bought AMC in 2012 for $2.6 billion and sold some of its shares the following year when AMC went public on the New York Stock Exchange.

AMC stock lost 1.8 percent today but remains up 8 percent year-to-date. Analysts are overweight the stock, with a $20.67 price target, 29.2 percent above its current price.