follow me on Twitter
« Scripps Gets Media Earnings Off On The Right Foot | Main | CBS: Another Unimpressive Quarter »
April 28, 2008
Regal Catches A Downgrade Off Average Quarter
As I mentioned yesterday, former Northlake long Regal Entertainment shares caught a downgrade after reporting an inline quarter late last week. The stock moved up the first day but after the downgrade on Friday more than eliminated the gains. I have yet to read the downgrade but I suspect it had to do with the loss of fundamental momentum due to the stiff box office comparisons from May through August. RGC will show good growth this year thanks to acquisitions, a growing contribution from its partial ownership of National Cinemedia (NCMI), and a 53 week year (the extra week is a holiday week and could add 7-8% to EBITDA for the year). However, organic growth will be limited because to the comparison to last summers record-breaking summer box office....
....3Q comps are the toughest so sentiment toward RGC shares need a boost from the May slate of potential blockbusters including Iron Man, Speed Racer, Indiana Jones, and the next Narnia film. One thing working in favor of the box office is that last year there were only three films significant films releases in May (Spiderman 3, Shrek 3, Pirates 3). Granted each of these films grossed $300 million but no other May release reached $50 million. This year in addition to the big four films there are several other films with the potential to do $50-100 million. Should May box office disappoint, RGC shares could head toward their 52 week low given that 3Q will be very difficult. I'd be a buyer near the low thanks to the stable and hefty dividend and the strength anticipated against easy comps from Thanksgiving through New Year's.
Posted by Steve Birenberg at April 28, 2008 02:57 PM in RGC
1.WHAT DO YOU THINK OF WIRELESS INDUSTRY IN GENERAL TO THE END OF THE YEAR?
2.DO YOU THINK CETV'S REPORT TOMORROW AGAIN WILL BE EXCELLENT?
3.ANY THOUGHT'S ABOUT VIP,MICC ETC?
4.I COULD BE WRONG,BUT IT SEEMS LIKLEY THAT THE OVERALL MARKET WILL RETEST THE LOWS IN MAY/JUNE.
DO YOU AGREE?
1. I think that wireless is in better shape than many people had thought it would be this year. The US market has issues as penetration is at levels that subscriber growth is slowing but data revenue continues to grow. Outside, the US, particularly in emerging markets I think 1Q results have eased concerns.
2. I expect a very good report. Gudiance for 2008 will be more important. I think the stakes have been raised on this front by the recent Goldman upgrade and estimate increase followed by another estimate increase by Janco Partners. My numbers are close to these new higher numbers. I'd be surprised if these analysts got aggressive unless they were getting good vibes from management. Look for revs north of $1.05 billion and EBITDA north of $425 million.
3. Nothing to add about MICC, VIP other than the point made above. NIHD I think is out of the woods and might be the best emerging markets wireless stock for the next six months. No reason to sell of any of them unless you are a trader.
4. I think we are at the top of the trading ragne and due for a pullback but I do not think we will see the lows again because the crisis has passed. I think a 5% pullback is possible though.
Posted by: Steve at April 29, 2008 08:49 AM