AMC Entertainment Holdings, Inc. (AMC) Is a Trending Stock: Facts to Know Before Betting on It

The chart below shows the evolution of the company’s forward 12-month consensus EPS estimate:

While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it’s important to know a company’s potential revenue growth.

For AMC Entertainment, the consensus sales estimate for the current quarter of $1.27 billion indicates a year-over-year change of +15.3%. For the current and next fiscal years, $4.6 billion and $5.08 billion estimates indicate -4.4% and +10.4% changes, respectively.

AMC Entertainment reported revenues of $1.35 billion in the last reported quarter, representing a year-over-year change of -4.1%. EPS of -$0.04 for the same period compares with -$0.09 a year ago.

Compared to the Zacks Consensus Estimate of $1.33 billion, the reported revenues represent a surprise of +1.2%. The EPS surprise was +42.86%.

Over the last four quarters, AMC Entertainment surpassed consensus EPS estimates two times. The company topped consensus revenue estimates two times over this period.

Without considering a stock’s valuation, no investment decision can be efficient. In predicting a stock’s future price performance, it’s crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company’s growth prospects.

While comparing the current values of a company’s valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock’s price.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

AMC Entertainment is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about AMC Entertainment. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

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