Facts you should know before betting on it

AMC Entertainment (AMC) was recently on Zacks.com’s list of most wanted stocks. Therefore, you may want to consider some of the key factors that could influence the stock’s performance in the near future.

Over the past month, shares of this movie theater operator returned -8.4%, compared to the Zacks S&P 500 Composite’s change of -2.2%. In that period, the Zacks Leisure and Recreation Services industry, which includes AMC Entertainment, has lost 7.1%. The crucial question now is: What could the future direction of the stock look like?

While media releases or rumors about a material change in a company’s business prospects usually cause the stock to “trend” and result in an immediate price change, there are always some fundamental facts that ultimately influence the buy and hold decision.

Rather than focusing on anything else, at Zacks we emphasize evaluating changes to a company’s earnings outlook. This is because we assume that the fair value of its shares is determined by the present value of its future earnings streams.

Our analysis is essentially based on how sell-side analysts covering the stock revise their earnings estimates to take into account the latest business trends. When a company’s earnings estimates rise, the fair value of its stock also rises. And when a stock’s fair value is higher than its current market price, investors tend to buy the stock, resulting in an increase in the stock price. Because of this, empirical studies suggest a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current quarter, AMC Entertainment is expected to report a loss of $0.14 per share, representing a change of +74.1% from the prior-year quarter. The Zacks Consensus Estimate remained unchanged over the past 30 days.

For the current fiscal year, the consensus earnings estimate of -$0.95 suggests a change of +59.9% year-over-year. Over the past 30 days, this estimate has changed by +24.5%.

For the next fiscal year, the consensus earnings estimate of -$0.43 represents a change of +54.6% from what AMC Entertainment was expected to report a year ago. Over the last month, the estimate has changed by -24.5%.

With an impressive, outside-audited track record of success, our proprietary stock rating tool – the Zacks Rank – is a more meaningful indicator of a stock’s near-term price performance because it effectively harnesses the power of earnings estimate revisions. The magnitude of the recent consensus estimate change, along with three other factors related to earnings estimates, have resulted in AMC Entertainment earning a Zacks Rank #2 (Buy).

The following chart shows the evolution of the company’s forecast 12-month EPS estimate:

While a company’s earnings growth is arguably the best indicator of its financial health, not much happens if it can’t grow revenue. It is almost impossible for a company to increase its profits without increasing its sales over long periods of time. Therefore, understanding a company’s potential revenue growth is crucial.

In the case of AMC Entertainment, the consensus revenue estimate of $1.29 billion for the current quarter suggests a year-over-year change of +16.4%. The estimates of $4.62 billion and $5.12 billion for the current and next fiscal years suggest changes of -4.1% and +11%, respectively.

AMC Entertainment reported revenue of $1.35 billion in its most recent reported quarter, representing a year-over-year change of -4.1%. Earnings per share were -$0.04 in the same period, compared to -$0.09 a year ago.

Compared to the Zacks Consensus Estimate of $1.33 billion, reported revenues represented a surprise of +1.2%. The EPS surprise was +42.86%.

Over the last four quarters, AMC Entertainment has surpassed consensus EPS estimates two times. The company topped consensus revenue estimates twice during that period.

No investment decision can be efficient without considering a stock’s valuation. Whether the current price of a stock accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key factor in future price performance.

Comparing the current value of a company’s valuation multiples, such as: B. Price to Earnings Ratio (P/E Ratio), Price to Sales Ratio (P/S) and Price to Cash Flow (P/CF), with its own historical values help determine whether the stock is fair, overvalued or undervalued is. However, comparing the company with its competitors based on these parameters gives a good impression of how appropriate the share price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and non-traditional valuation metrics) organizes stocks into five groups from A to F (A is better than B; B is better than C, etc.). ), making it helpful to determine whether a stock is overvalued, properly valued, or temporarily undervalued.

AMC Entertainment receives a grade of “C” in this regard, indicating that the company is trading on par with its peers. Click here to see the values of some of the evaluation metrics that determined this grade.

The facts discussed here and much other information on Zacks.com could help determine whether or not the market excitement surrounding AMC Entertainment is worth paying attention to. However, its Zacks Rank #2 suggests it could outperform the broader market in the near term.

Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click here to get this free report

AMC Entertainment Holdings, Inc. (AMC): Free stock analysis report

To read this article on Zacks.com click here.

Zacks Investment Research

Breaking News

Dellupodisabato

Facts you should know before betting on it

Leave a Reply Cancel reply