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AMC Entertainment Holdings (NYSE: AMC) fly high these days. Even after taking a step back this week, the number one multiplex operator is a 25-bagger in 2021. AMC’s pop is even more astonishing when you consider that the number of shares has grown from 104.3 million to the end of June of last year to more than 500 million. today. We’re talking about a 60-bagger over the past year in terms of market cap.
With AMC generating so much attention, it is natural to seek beneficiaries of the increasing valuations in the multiplex space. Royal cinema parent Cinémonde Group (LSE: CINE) (OTC: CNWGY), IMAX (NYSE: IMAX), and National CineMedia (NASDAQ: NCMI) appear to be investments that could build on AMC’s success. They might lack the fandom and squeezing potential of the nation’s premier movie theater chain, but it’s fair to say that if the market thinks AMC is worth 60 times what it made a year ago , these three names have the potential to climb higher. .
Image source: Getty Images.
1. Cineworld Group
Regal went from onscreen hero to villain last October, when he decided to close his theaters. Royal parent Cineworld joined AMC to reopen its venues earlier last summer as local ordinances allowed, but the lack of compelling theatrical releases has proven financially draining. the last drop for Cineworld came when the last film in the James Bond franchise, No time to die, has pushed back its big screen debut to 2021.
Cineworld’s decision to shut down all 543 of its US Regal theaters as well as its theaters in the UK and Ireland helped spare the operator a dark period of operations, but it may have cost more. Regal has lost its momentum with American viewers since it reopened earlier this year. The takeover of AMC was more fluid as it quickly seize market share of his rival.
The appeal to Cineworld here is that while AMC’s market cap has exploded about 60 times over the past year, we’ve seen Cineworld’s market cap rise by just 35%. AMC may be strengthening its lead over Regal, but if Regal is 60 times the company it was a year ago, it follows that Cineworld should at least double or triple during that time.
2. IMAX
If you are going to catch F9 at an AMC near you this weekend, chances are it’s an IMAX screening. IMAX offers larger-than-life theatrical experiences, and it’s a basic premium offering in most AMC multiplexes.
Unlike Regal, IMAX is an AMC partner. They both benefit financially when you watch a great action movie on the enhanced IMAX projection platform. IMAX also benefits from its global reach. Movie theaters started to rebound last year in many key foreign markets, putting IMAX ahead of the curve in the turnaround.
IMAX revenue grew in its most recent quarter, climbing 11% in the first three months of this year. AMC’s year-over-year revenue fell 84% in the same quarter.
3. National CineMedia
The smallest – and riskiest – of the three plays here is National CineMedia, a cinema advertising provider. Yes, National CineMedia is the company you can blame for the long roll of ads before the trailers even start in your local theater. Exhibitors turn to the turnkey solution to monetize their traffic through the on-screen advertising network.
B. Riley’s analyst Eric Wold raised his price target on National CineMedia Thursday from $ 6 to $ 7 due to rebound potential. He sees cinema advertising taking a larger chunk of marketing budgets with higher prices as advertisers pay to reach younger audiences that are not easy to grasp these days.
National CineMedia has been consistently profitable until last year. Annual earnings were stuck at around $ 445 million in the last few years before last year’s plunge, but National CineMedia’s current market cap of $ 405 million is lower than that – and the stock is making less. 11 times its 2019 profits.
AMC’s value as media stock flies towards an industry recovery. If this is the case, it can reasonably be expected that Cineworld, IMAX and National CineMedia will also benefit from the optimistic end of Hollywood.
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Rick munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
