AMC Entertainment Holdings, Inc.

AMC Details

AMC Entertainment Holdings, Inc. (NYSE: AMC) is a company that works in the theatre industry. It operates theatres in 12 countries, including the United States, Europe, and the Saudi Arabian Kingdom. The principal sources of revenue for its theatrical exhibitions are box office admissions and theatre food and beverage sales. As of September 30, 2021, AMC owned, operated, or had a stake in 951 theatres with 10,604 screens.

Latest News:

• Record Ticket Sales: AMC stated on December 20, 2021, that, thanks to the success of Marvel & Sony Pictures' SPIDER-MAN: NO WAY HOME in its first weekend, it has smashed multiple post-reopening attendance records. For the first time since December 2019, AMC has surpassed 1 million domestic viewers every day from Thursday through Sunday. AMC sold more than five million tickets in the United States out of seven million sold worldwide.
• Litigation Filed: On November 22, 2021, Miller Shah LLP stated that the United States District Court for the Southern District of New York had authorized the class action settlement for AMC investors who bought it between December 20, 2016, and August 1, 2017. The purpose of the hearing is to determine whether the proposed Settlement of the securities class action claims asserted in the Action, in which AMC will deposit USD 18 million into a Settlement Fund in exchange for the dismissal of the Action with prejudice and a release of claims against the Defendants, is fair and in the best interests of the Class.

9MFY21 Results:

• Rise in Topline: Total revenue increased by 25.59% to USD 1.36 billion during 9MFY21 (ended September 30, 2021) from USD 1.08 billion during 9MFY20 due to growth across all segments.
• Increase in Profitability: AMC's net losses decreased to USD 1.14 billion during 9MFY21, compared to USD 3.64 billion during 9MFY20.
• Leveraged Balance Sheet: The company had USD 1.61 billion in cash and cash equivalents as of September 30, 2021, and USD 5.53 billion in total debt (including finance leases).

Key Risks:

• Supplier Concentration Risk: AMC relies on a few vendors for various products, supplies, and services, including a single vendor for warehousing and distribution of most of the products and supplies for its food and beverage operations. Any shortages, delays, or disruptions in the supply of food and beverage goods and other supplies to its theatres could harm the company's operations and cash flow.
• Dependence on Distributors: By engaging in long-term agreements and competing for rights on a film-by-film and theatre-by-theatre basis, AWC relies on motion picture distributors. Its business may suffer if its access to motion pictures is limited or delayed owing to deterioration in its relationships with one or more distributors.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AMC Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

AMC's share price has risen 27.41% in the past week and is currently leaning towards the mid-band of the 52-week range of USD 1.91 to USD 72.62. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 45.69. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 28.50.

Considering the uptick in the stock price in a short span and current valuation, we believe the decent business fundamentals are adequately reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 29.85, up 1.96%, as of December 20, 2021, 10:18 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.