AMC Entertainment Holdings, Inc. (NYSE:AMC) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a respectable set of results; while revenues of US$3.9b were in line with analyst predictions, statutory losses were 18% smaller than expected, with AMC Entertainment Holdings losing US$0.93 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for AMC Entertainment Holdings
Following the latest results, AMC Entertainment Holdings’ seven analysts are now forecasting revenues of US$4.40b in 2023. This would be a meaningful 12% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 79% to US$0.40. Before this latest report, the consensus had been expecting revenues of US$4.52b and US$0.42 per share in losses. It looks like there’s been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
The consensus price target fell 20% to US$2.39, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic AMC Entertainment Holdings analyst has a price target of US$4.50 per share, while the most pessimistic values it at US$0.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn’t rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that AMC Entertainment Holdings’ rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 12% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 17% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.6% annually. So it looks like AMC Entertainment Holdings is expected to grow faster than its competitors, at least for a while.
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AMC Entertainment Holdings’ future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for AMC Entertainment Holdings going out to 2025, and you can see them free on our platform here..
We don’t want to rain on the parade too much, but we did also find 4 warning signs for AMC Entertainment Holdings (2 shouldn’t be ignored!) that you need to be mindful of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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