UPDATE: Benchmark Company Initiates Coverage on Regal Entertainment on Pure Play Offering
In a report published Wednesday, Benchmark Company analyst Mike Hickey initiated coverage on Regal Entertainment Group (NYSE: RGC) with a Hold rating and $17.72 price target.
In the report, Benchmark Company noted, “We're initiating on Regal Entertainment Group with a Hold rating, and $17.72 price target, with a (0.9%) share price to target return opportunity and an implied 4.7% effective annual yield. The Company's shares offer investors a pure play on the domestic cinema industry, an industry often considered defensive to economic downturns and competitive entertainment solutions, while potentially benefiting from the relative perceptual strength of the US economy versus Europe and / or emerging markets. The domestic box office industry has averaged a 4% CAGR from 1982 through 2012, with 1% attributable to attendance growth and 3% attributable to price and mix consideration. The Company's executive team is strong and we believe they will continue to drive relatively strong adjusted EBITDA and free cash flow despite periods of negative box office volatility. They have generated $321 million in free cash flow over the last four quarters, generating a nearly 11.5% free cash flow yield. The Company's shares offer investors a compelling dividend yield with trailing four-quarter dividend payout representing only 41% of their free cash generation.”
Regal Entertainment Group closed on Tuesday at $18.03.
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