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What Could Drive AMC Entertainment’s Bottom Line in 2019?

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Future expectations

For the fourth quarter, analysts expect AMC Entertainment (AMC) to report an adjusted EPS of $0.14—a deterioration compared to the adjusted EPS of $0.26 reported in the fourth quarter of fiscal 2017. The decline in revenues and rising costs could hurt the bottom line.

AMC’s costs rose in the first three quarters of 2018. The company’s operating costs rose 3.8%, 10.7%, and 5.1%, respectively, due to increases in operating, food, beverage, and film exhibition costs.

AMC’s expenses are rising due to ongoing investments like the addition of recliners and large-format screens along with higher food, beverage, and film exhibition costs. The company is trying to keep expenses in check by reducing its overhead costs and operating hours.

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For fiscal 2018, analysts expect AMC to deliver an adjusted EPS of -$0.26, which is better than the adjusted EPS of -$1.38 reported in 2017. For fiscal 2019, analysts expect AMC to deliver an adjusted EPS of $0.39. Higher revenues should cushion the numbers amid rising costs and the increased tax burden.

Margin numbers

Top-line growth cushioned AMC’s EBITDA and operating profit YoY in the first two quarters of 2018. However, AMC’s operating loss expanded YoY in the third quarter to $21.9 million from $4.1 million. In the third quarter, the company’s adjusted EBITDA fell YoY to $142.4 million from $147.4 million due to its Stubs A-List launch.

Management expects the Stubs A-List launch to impact its adjusted EBITDA in the fourth quarter. The company expected 2019 to be a break-even year for the Stubs A-List program. Due to the growing number of subscribers, AMC expects the program to become accretive to its EBITDA in 2019.

Cinemark Holdings

For the fourth quarter, Wall Street analysts expect Cinemark Holdings (CNK) to report an adjusted EPS of $0.43—a deterioration compared to the adjusted EPS of $0.82 in the fourth quarter of 2017.

For 2018, analysts expect Cinemark to deliver an adjusted EPS of $2.11—down 6.6% YoY. For 2019, analysts expect AMC to report an adjusted EPS of $2.35, which reflects 11.4% YoY growth.

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