A Look At 4 Movie Theater Stocks Amid Poor Summer Box Office

The summer of 2014 is about to go down as a flop in terms of movie ticket sales. That is bad news not only for the filmmakers, but for the operators of the theaters where their works are traditionally viewed.

The largest U.S. theater operators include AMC Entertainment Holdings Inc AMC, Carmike Cinemas, Inc. CKEC, Cinemark Holdings, Inc. CNK and Regal Entertainment Group RGC.

Box-office totals were down more than 15 percent from last year, an eight-year low. Adjusted for inflation, it was the worst season since 1997. For the first time in 13 years, no summer film brought in $300 million in ticket sales domestically, aside from the season's box-office champ, Marvel's "Guardians of the Galaxy," which reached that plateau this past weekend.

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For some, new entertainment options, such as online streaming or the harm done by digital piracy, get the blame for the slump in ticket sales. Others see the motion picture industry as cyclical and look forward to a stronger 2015. For theater operators and its investors, there are the most recent quarterly results to get through first.

Here is a quick look at how the theater operators mentioned above have fared recently and what analysts expect from them.

AMC Entertainment Holdings, Inc

For the current quarter, analysts are looking for earnings per share that are less than half of what they were in the second quarter. AMC's market capitalization is more than $2 billion and its dividend yield is near 3.4 percent. Its long-term EPS growth forecast is about 10 percent, and its return on equity is more than 25 percent.

Ten of the 12 analysts surveyed by Thomson First Call recommend buying shares, and the other two rate the stock at Hold. The share price pulled back more than 9 percent following the critical July 4 weekend and has only just recovered. The stock has underperformed the rivals featured here over the past six months.

Carmike Cinemas, Inc.

The consensus EPS forecast calls for a year-on-year gain for the current quarter, though analysts underestimated EPS in the previous four quarters. Carmike has a market cap of about $767 million. The long-term EPS growth forecast is almost 16 percent, but the price-to-earnings (P/E) ratio is greater than the industry average.

Nine of the 10 analysts surveyed recommend buying shares, but with only two of them rating the stock at Strong Buy. Shares hit a multi-year high in June, but then slumped into July and have yet to fully recover. Over the past six months, the stock has underperformed Cinemark and Regal, as well as the S&P 500.

Cinemark Holdings, Inc.

EPS topped estimates by double-digit percentage in the previous two quarters, but declines on the top and bottom lines are predicted for the current period. It sports a market cap near $4 billion and offers a dividend yield of about 3.0 percent. The operating margin is greater than the industry average and the return on equity is about 18 percent.

Of the 20 analysts polled, 15 recommend buying shares. None of them rate the stock at Underperform. Shares rose 12 percent in June, before pulling back in July, only to recover and reach a multi-year high in August. The stock has outperformed the competitors featured here and the S&P 500 over the past six months.

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Regal Entertainment Group

The consensus EPS forecast was on target for the second quarter. Analysts are looking for an earnings slump here in the current quarter. Regal's market cap is more than $3 billion. It has a dividend yield of about 4.3 percent, but the return on equity is in the red and short interest is more than 12 percent of the float.

The consensus recommendation is to hold shares, and it has been more at least three months. Shares pulled back more than 8 percent following July 4, recovered in August and have retreated again since Labor Day. Over the past six months though, the stock has outperformed AMC and Carmike.

At the time of this writing, the author had no position in the mentioned equities.

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