AMC Stock Rebounds as Q4 Earnings Approach: Will it Continue?
AMC Stock Rebounds as Q4 Earnings Approach: Will it Continue?
Analysts expect AMC to report a loss of 61 cents per share on revenue of $1.02 billion, representing growth of nearly 50% on the earnings per share and 3% on revenue
- AMC is scheduled to report fourth quarter earnings on Feb. 28.
- CEO Adam Aron states he has “much to say” on X.
- Box office outlook is key to AMC’s strategy.
AMC Entertainment Holdings (AMC) is set to report fourth-quarter and full-year fiscal results on Wednesday, Feb. 28, after market close. Despite a more than 11% increase in the stock price during February, AMC is trading near all-time lows after January, when it fell more than 30%. Will earnings help to propel February’s performance into March, or will the stock reverse lower and target recent lows?
Fourth Quarter earnings expectations
Analysts expect AMC to report a loss of 61 cents per share on revenue of $1.02 billion, representing a year-over-year growth rate of nearly 50% on the earnings per share (EPS) figure and 3% on revenue.
As a theater chain operator, AMC’s performance is highly correlated with the U.S. box office. The fourth quarter didn’t have a single movie that grossed over $200 million, with Taylor Swift: The Eras Tour bringing in the largest haul at $180 million, followed by The Hunger Games: The Ballad of Songbirds & Snakes at $160 million, according to Box Office Mojo. Those movies paled compared to films from earlier 2023, including Barbie and The Super Mario Bros. Movie, which saw gross revenue of $636 and $575 million, respectively.
However, there are signs of optimism despite the relatively weak box office performance. Another theater chain operator, Cinemark, saw quarterly revenue of $638.9 million, up 6.5% from a year before. The AMC peer also saw record revenues from concessions, signaling consumers are willing to splurge for a night out at the movies.
AMC moving forward depends on the box office
Investors will be tightly dialed in on the earnings call. CEO Adam Aron stated he will have “much to say” on an X post, formerly Twitter. Adam will likely touch on efforts to reduce debt and the capital allocation priorities. If Mr. Aron provides clarity on strengthening the company’s balance sheet and maintaining proper liquidity, investors may see some merit in the stock's future.
Capital allocation concerns and liquidity have been front and center for investors since last August when its preferred equity shares, APE, were converted, leading to a sharp drop in the price of the stock.
However, as mentioned before, the box office outlook is critical to AMC's performance. While it is outside the company’s control, investors will want to hear management's thoughts on the upcoming box office haul and its guidance on the matter. So far, the first quarter has been somewhat disappointing.
While Wonka's release from December carried over some strength, grossing $81 million in the first quarter, the closest runner-up was Mean Girls at $72 million. Still, there is some hope for Q1 numbers, with Frank Herbert’s sci-fi space epic, Dune: Part Two, expected to pull as much as $80 million in its opening weekend. If that upper range number is met or exceeded, it could give AMC a little boost.
Trading AMC earnings
AMC is trading with an implied volatility rank (IVR) of 5.6, although the consistent volatility of the stock over the last twelve months makes that slightly misleading on the surface. The March 1 expiration strike has an IVX of 197.1% representing an implied move of +/- 0.50. However, because the stock price is low, about 4.55, those who want to speculate on a move would likely be best-served with buying an outright call or put to play a directional bias for a tail risk move.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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