Theater company AMC Entertainment (NYSE:AMC) beat Wall Street’s revenue expectations in Q3 CY2024, but sales fell 4.1% year on year to $1.35 billion. Its GAAP loss of $0.06 per share was also 30.6% above analysts’ consensus estimates.

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AMC Entertainment (AMC) Q3 CY2024 Highlights:

• Revenue: $1.35 billion vs analyst estimates of $1.33 billion (1.1% beat)

• EPS: -$0.06 vs analyst estimates of -$0.09 (30.6% beat)

• EBITDA: $161.8 million vs analyst estimates of $154 million (5.1% beat)

• Operating Margin: 5.3%, down from 7.1% in the same quarter last year

• EBITDA Margin: 12%, down from 13.8% in the same quarter last year

• Free Cash Flow was -$92.2 million, down from $8.4 million in the same quarter last year

• Market Capitalization: $1.59 billion

Company Overview

With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE:AMC) operates movie theaters primarily in the US and Europe.

Leisure Facilities

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.

Sales Growth

Reviewing a company’s long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. AMC Entertainment’s demand was weak over the last five years as its sales fell by 4% annually, a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. AMC Entertainment’s annualized revenue growth of 4.1% over the last two years is above its five-year trend, but we were still disappointed by the results. Note that COVID hurt AMC Entertainment’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

This quarter, AMC Entertainment’s revenue fell 4.1% year on year to $1.35 billion but beat Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 10.4% over the next 12 months, an improvement versus the last two years. Although this projection illustrates the market believes its newer products and services will spur better performance, it is still below the sector average.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefitting from the rise of AI, available to you FREE via this link.