Milwaukee-based
The Marcus Corporation
(
MCS
) reported second quarter 2012 earnings of 10 cents per share, way
ahead of the Zacks Consensus Estimate of a loss of 2 cents.
Reported earnings also surpassed the year-earlier quarter earnings
of 7 cents per share.
The entertainment and lodging company's revenues were up 3.8%
year over year to $90.1 million. The increase in revenue was
attributable to improved performance by the company's lodging
division, Marcus Hotels and Resorts.
The Marcus Hotels & Resorts division posted a 9.4% growth in
revenues and an identical growth in revenue per available room
(RevPAR), based on higher occupancy levels and room rates arising
from an upside in business traveler and leisure demand. The company
witnessed upside in average daily rate for the fourth consecutive
quarter.
Marcus' box office revenues fell 2.0% year over year during the
reported quarter due to weaker 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 1, Paranormal Activity
3 andPuss in Boots (3D). Additionally, the company continues to
benefit from the massive popularity of 3D movies.
Operating income of Marcus rose 15.8% to $6.3 million in the
reported quarter, as the lodging division operating income grew
57.7%, partially offset by a 8.2% drop in entertainment division's
operating income.
Financial Position
During the quarter, the company repurchased 119,000 shares and
also continued to reduce its debt-to-total-capitalization
ratio. However, Marcus will disclose the details of balance
sheet in its 10Q filing given the accounting treatment of digital
cinema master license agreement is not yet finalized.
Our Take
Marcus reported better-than-expected results in the second
quarter of 2012. Concurrently, we expect the analysts' estimates to
go up in the coming days. The Zacks Consensus Estimates for 2011
and 2012 are pegged at 63 cents and 76 cents, respectively.
Moreover, with a strong booking window, the company's lodging
division is expected to perform well in 2012.
Management further seeks to develop hotels under management
contracts and continues to make efforts to refurbish its existing
properties. Moreover, with limited supply growth in the market,
management expects to gain pricing power as the economy
improves.
The company expects the holiday season to be accretive for
Marcus Theater with films like The Muppets, Hugo (3D), Arthur
Christmas (3D), Mission: Impossible - Ghost Protocol, Sherlock
Holmes: A Game of Shadows and Alvin & the Chipmunks:
Chip-Wrecked. Other films releases in the pipeline for the upcoming
holiday season include The Girl with the Dragon Tattoo, Adventures
of TinTin (3D), We Bought a Zoo and War Horse. To further boost
income, the division is focusing on improving its technology and
extending its food and beverage concepts to additional
theaters.
Marcus currently retains a Zacks #1 Rank, which translates into
a short-term Strong Buy rating. We are also maintaining our
long-term Outperform recommendation on the stock. The
competitors of Marcus include
Wyndham Worldwide Corporation
(
WYN
) and
Choice Hotels International Inc.
(
CHH
).
CHOICE HTL INTL (
CHH
): Free Stock Analysis Report
MARCUS CORP (
MCS
): Free Stock Analysis Report
WYNDHAM WORLDWD (
WYN
): Free Stock Analysis Report
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