Entertainment and lodging company,
The Marcus Corporation
) reported first quarter fiscal 2013 earnings of 37 cents per
share, which lagged the Zacks Consensus Estimate of 49 cents per
share. Reported earnings also dipped below the year-earlier quarter
earnings of 42 cents per share due to the absence of a key holiday
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The Milwaukee-based company's revenues slipped 4.8% year over year
to $117.9 million and missed the Zacks Consensus Estimate of $129
million as well, which was mainly attributable to the poor
performance of its theater business.
The Marcus Hotels & Resorts division posted a 2.9% growth in
revenues, thanks to 3.7% 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.
Marcus' box office revenues fell 10.8% year over year during the
reported quarter due to a weaker line up of films as compared with
the year-ago quarter and lesser theater visits by people owing to
the broadcasting of the Olympic games on television. The top
performing films during the quarter were The Dark Knight Rises,
Brave (3D), Ted, The Amazing Spider-Man (3D) and Madagascar 3 (3D).
Operating income of Marcus declined 12.4% to $20.5 million, as the
entertainment division's operating income fell 21.4%, partially
offset by a 10.2% spike in the lodging division operating income.
During the quarter, the company repurchased 97,000 shares and its
debt-to-total-capitalization ratio was 36%. At the end of the
quarter, the company had cash and cash equivalents of $14.3 million
versus $12.4 million in 2012. Shareholder's equity was $352.3
million as compared to $343.8 million in 2012.
Marcus reported lower-than-expected results in the first quarter of
fiscal 2013. Concurrently, we expect the estimates to go down in
the coming days. The Zacks Consensus Estimate for fiscal 2013 is
pegged at 85 cents.
However, management remains focused on developing hotels under
management contracts and therefore, recently announced a plan to
buy The Cornhusker Hotel and its attached office property - The
Cornhusker Office Plaza, situated in Lincoln, Nebraska. Moreover to
boost its portfolio base, the company continues to make efforts to
refurbish its existing properties. In the first quarter it
completed the renovation of an AAA Four Diamond hotel - Hilton
Milwaukee - located in the heart of downtown Milwaukee.
Furthermore, with limited supply growth in the market, management
expects to gain pricing power as the economy improves.
The company expects the upcoming quarter to be promising for Marcus
Theater with films like Disney's Frankenweenie (3D), Taken 2 and
Paranormal Activity 4, scheduled for release in October 2012. The
line of films scheduled for release in the upcoming holiday season
in November includes Wreck-It Ralph, the next James Bond film
Skyfall, The Twilight Saga: Breaking Dawn - Part 2, Life of Pi (3D)
and Rise of the Guardians (3D). To further boost income, the
division is focusing on extending its food and beverage concepts to
The Marcus Corporation currently carries a Zacks #4 Rank, which
translates into a short-term 'Sell' 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.