Powered by WP Bannerize

postheadericon AMC Goes for $2.6 billion; What Price the Others?

The recent sale of AMC Entertainment to China’s Dalian Wanda Group, coming in the closing stages of our research for the latest edition of Moviegoing, caused us some slight inconvenience and inspired modest admiration at the price obtained, widely reported as $2.6 billion. If correct, this works out at 8.4 times the circuit’s historic EBITDA.

This figure is somewhat higher than the current stock market valuations of the other large American circuits. Cinemark, at its recent share price of $23.25 is valued at an enterprise value of 8.1 times its 2011 EBITDA. This higher valuation than either Regal or Carmike is supported by the fact that its Latin American circuit is still growing. The company also pays a quarterly dividend of $0.21 per share.

Coincidentally, Regal also pays a $0.21 quarterly dividend, though its lower share price, $13.93 at the time of writing, means its shares yield an impressive 6.0% compared to the 3.6% offered by Cinemark. With its operations confined to the lacklustre domestic exhibition sector, however, Regal shares are rated lower than Cinemark. Its enterprise value of $3.9 billion equates to 7.7 times its $505.5 million of EBITDA in 2011.

Carmike is valued lowest of all. Quite highly geared – debt accounts for nearly two-thirds of its enterprise value – at the current share price of $14.00 the company sells for 6.6 times EBITDA.

Our share tip? We don’t really have one, relative to each other, at least, these valuations look about right. And with the ongoing crisis in the Eurozone, there are cheaper stocks in Europe, notably CinemaxX in Germany and Kinepolis in Belgium – though to invest in the latter you  probably need to be confident that Spain, where Kinepolis has invested heavily, will stay in the Eurozone.

Be Sociable, Share!

Leave a Reply