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.