Entertainment and lodging company,
The Marcus Corporation
), reported second-quarter fiscal 2013 earnings of 17 cents per
share. The result beat the Zacks Consensus Estimate of 15 cents
per share as well as the year-ago earnings of 10 cents a share.
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The Milwaukee-based company's total revenue jumped 11.7% year
over year to $100.6 million and surpassed the Zacks Consensus
Estimate of $98.0 million. The surge in revenue was due to a
strong performance from its theater business.
The Marcus Hotels & Resorts division posted 3.4% growth in
revenues, thanks to a 0.8% rise in revenue per available room
(RevPAR). The increase in RevPAR was driven by continued
improvement in the average daily rate arising from an increase in
business as well as leisure travelers.
During the reported quarter, Marcus' box office revenues took a
substantial leap of 21.7% year over year. This was due to a
stronger line up of films as compared with the year-ago quarter.
The top performing films during the quarter were The Twilight
Saga: Breaking Dawn - Part 2, Skyfall, Wreck-It Ralph (3D), Taken
2 and Hotel Transylvania (3D).
Operating income of Marcus also grew 55.2% to $9.7 million, aided
by a robust 87.8% increase in the entertainment division's
operating income. However, this was partially offset by a 4.0%
dip in the lodging division operating income.
Operating income in Marcus Hotels & Resorts was marred by the
settlement of a litigation associated with the Platinum Hotel
& Spa in Las Vegas. Excluding the settlement, operating
income for Marcus Hotels was nearly 10% in the second quarter.
At the end of the quarter, the company had cash and cash
equivalents of $17.7 million versus $12.4 million in 2012.
Long-term debt was $221.4 million as compared with $106.3 million
During the quarter, the company repurchased 1.6 million shares.
We remain impressed with the company's better-than-expected
results in the second quarter of fiscal 2013. The upcoming
holiday period also bodes well for the company. Marcus' results
will likely be boosted in the upcoming quarters as several big
budget studio films are lined up for release in the fourth
quarter of 2012, especially in the week between Christmas and New
Furthermore, the company expects this year's Christmas and New
Year celebrations to last longer than usual. This is because both
the events have fallen on weekdays and will probably last till
weekend. Concurrently, we expect the estimates to go up in the
However, the outlook for the hotel division is not that
encouraging. Lately, the hotel business has been performing
better. However, management believes that an increase in room
supply in its vital Milwaukee market in the next year will likely
hurt pricing power.
The Marcus Corporation currently carries a Zacks #2 Rank, which
translates into a short-term 'Buy' rating. We also have a
long-term 'Outperform' recommendation on the stock. Marcus
competes with the likes of
Wyndham Worldwide Corporation
Choice Hotels International Inc.
) and more.