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AMC Entertainment (AMC) Q4 Earnings: Will it Disappoint?

Leisure and recreation services company, AMC Entertainment Holdings, Inc.AMC , is slated to report fourth-quarter 2016 results on Feb 28, after the closing bell.

In the past three months, shares of AMC Entertainment decreased 10.40%, underperforming the Zacks categorized Leisure and Recreation Services industry which witnessed a gain of 8.68%.

Last quarter, the company posted a positive earnings surprise of 10.71%. Moreover, the company surpassed the Zacks Consensus Estimate in three of the four trailing quarters, with an average beat of 7.39%.

Let's see how things are shaping up for this announcement.

Factors at Play

AMC Entertainment is one of the largest theatrical exhibition company in the U.S., Europe and globally as well. The company is also an industry leader in innovation and operational excellence. As of Dec 31, 2016, it owns about 900 theaters across 10,000 screens worldwide, with 661 theaters with more than 8,200 screens being operated in the U.S. Further, it has been actively involved in the renovation and refurbishing of multiplexes through enhancements like reclining seats, improved food and beverages, dine-in theaters along with advanced sound and digital equipment.

We also laud the company's efforts to offer a quarterly cash dividend of $0.20 per share on shares of Class A and Class B common stock for the quarter ended Dec 31, 2016. The dividend will be paid on Mar 27, 2017, to shareholders of record on Mar 13.

Opening of the 50th Dolby Cinema at AMC location can be considered a major breakthrough as well. Meanwhile, the acquisition of a smaller rival, Carmike Cinemas Inc., also bodes well for the company.

Further, IMAX Corporation IMAX and AMC Theatres' agreement marks a new business prospect. The company's current commitment to IMAX is to increase the number of IMAX theaters by 15% year over year by the end of first-quarter 2017, expanding to 175 locations by Mar 2017 and 185 theatres through 2019.

However, the new business scheme to be adopted by the Hollywood studios (film makers) has come as a major setback to the movie theater (exhibitor) industry of late. The strategy involves making newly released movies available for home viewing at a premium within as little as two weeks of its screen debut, thus affecting the movie release. Moreover, being part of the entertainment industry exposes the company to macroeconomic fluctuations and intense competition from the likes of Regal Entertainment Group RGC and IMAX Corp., who also belong to the same industry.

Earnings Whispers

Our proven model does not conclusively show that AMC Entertainment is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: AMC Entertainment has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 34 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: AMC Entertainment carries a Zacks Rank #5 (Strong Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

AMC Entertainment Holdings, Inc. Price and EPS Surprise

AMC Entertainment Holdings, Inc. Price and EPS Surprise | AMC Entertainment Holdings, Inc. Quote

Key Pick

Here is a company in the Zacks categorized broader Consumer Discretionary sector that has the right combination of elements to post an earnings beat this quarter.

Tribune Media Company TRCO is expected to release fourth-quarter earnings on Mar 1, 2017. The company has an Earnings ESP of +4.44% and a Zacks Rank #3.You can see the complete list of today's Zacks #1 Rank stocks here . Tribune Media surpassed the Zacks Consensus Estimate in two of the previous four quarters.

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Tribune Media Company (TRCO): Free Stock Analysis Report

Regal Entertainment Group (RGC): Free Stock Analysis Report

Imax Corporation (IMAX): Free Stock Analysis Report

AMC Entertainment Holdings, Inc. (AMC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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