Here’s Why Investors Should Retain AMC Entertainment Stock Now

AMC Entertainment Holdings, Inc. (AMC Quick QuoteAMC – Free Report) is poised to benefit from a recovering box office and revenue diversification initiatives such as retail popcorn and innovative content. A focus on strengthening the balance sheet bodes well. However, declining attendance and market share pose concerns.

Factors Driving AMC Stock

The second half of 2024 marked a pivotal recovery for the box office, highlighted by a third-quarter domestic box office high of $2.7 billion. June served as a turning point, driven by the blockbuster success of Disney’s Inside Out 2, which became the highest-grossing animated film of all time. The third quarter built on this momentum with a strong lineup of releases, including Disney’s Deadpool and Wolverine, Universal’s Despicable Me 4 and Twisters, and Warner Bros.’ Beetlejuice Beetlejuice.

For the fourth quarter, the company remains optimistic about releases, including Mufasa: The Lion King, Moana 2 and Wicked. Beyond that, major blockbusters like Avatar 3, Jurassic World 4 and Star Wars are expected to sustain box office growth into 2025 and 2026, positioning AMC for growth.

AMC’s focus on efficiency and innovation has significantly improved its financial metrics. During the third quarter of 2024, Adjusted EBITDA was four times higher than in the second quarter of 2024, aligning with pre-pandemic levels. The company also achieved record revenue per patron and food and beverage sales, supported by premium large-format screens and new menu offerings.

AMC’s foray into consumer goods through its Perfectly Popcorn line has been a success, with retail availability expanding from 2,500 locations in 2023 to over 6,000 in 2024. By 2025, this footprint is expected to grow to 10,000 locations, highlighting the potential of this diversification strategy.

AMC has made substantial progress in strengthening its balance sheet, a critical factor for its long-term recovery. The company extended $2.4 billion in long-term debt maturities to 2029 and 2030, paid down $345 million in debt year to date (as of Nov. 6, 2024) and raised $250 million through equity. AMC ended third-quarter 2024 with $527 million in cash, ensuring robust liquidity to navigate future challenges.

Concerns for AMC Stock

Image Source: Zacks Investment Research

Shares of AMC Entertainment have declined 9.1% in the past three months against the industry’s growth of 16%. The downside can be attributed to declining attendance and market share.

AMC’s third quarter 2024 attendance was 12% lower than the same period last year, with European markets experiencing a steep 16% decline. Consolidated attendance was 25% lower than pre-pandemic figures.

Furthermore, the third quarter film slate did not resonate as strongly in AMC’s major urban U.S. markets like New York and Los Angeles, causing a loss of 60 basis points in domestic market share. The geographic and audience disparity raises concerns about the company’s ability to maintain momentum across its key regions.

AMC’s Zacks Rank and Stocks to Consider

AMC Entertainment currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Consumer Discretionary sector are:

Cinemark Holdings, Inc. (CNK Quick QuoteCNK – Free Report) currently carries a Zacks Rank #2 (Buy). CNK delivered a trailing four-quarter earnings surprise of 164.8%, on average. The stock has surged 119.6% in the past year. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

The Zacks Consensus Estimate for CNK’s 2025 sales indicates growth of 11.1% from the year-ago levels.

Norwegian Cruise Line Holdings Ltd. (NCLH Quick QuoteNCLH – Free Report) currently has a Zacks Rank #2. NCLH delivered a trailing four-quarter earnings surprise of 4.2%, on average. The stock has surged 28.5% in the past year.

The Zacks Consensus Estimate for NCLH’s 2025 sales and EPS indicates growth of 8.3% and 25%, respectively, from the year-ago levels.

Royal Caribbean Cruises Ltd. (RCL Quick QuoteRCL – Free Report) currently carries a Zacks Rank #2. RCL delivered a trailing four-quarter earnings surprise of 16.2%, on average. The stock has surged 79.7% in the past year.

The Zacks Consensus Estimate for RCL’s 2025 sales and EPS indicates growth of 9.5% and 23.8%, respectively, from the year-ago levels.