AMC Pre-Earnings: Analysts Expect a Large EPS Drop in Q3

Shares of movie theater chain AMC Entertainment (AMC) are up in today’s trading as investors await its Q3 earnings results on November 6 after the market closes. Analysts are expecting earnings per share to come in at -$0.09 on revenue of $1.33 billion. This equates to 212% and 5.7% year-over-year decreases, respectively, according to TipRanks’ data.

This drop in financial performance is likely due to the Writer’s and Actor’s strikes that occurred last year, which delayed the production of many films that could have helped draw more viewers to AMC’s theaters. However, this is not the only issue plaguing the firm.

In fact, AMC has a lot of debt on its balance sheet–$8.67 billion–which eats into its earnings potential. More specifically, AMC paid $370.4 million in interest alone during the previous four quarters. This creates a high financial hurdle rate that the company needs to overcome to post profits, especially since it has a lot of operating expenses. It also increases the risk to equity holders, as the AMC has a higher chance of running into liquidity issues.

What Do Options Traders Anticipate?

Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. Indeed, the at-the-money straddle suggests that options traders expect a 10.51% price move in either direction. This estimate is derived from the $4.5 strike price, with call options priced at $0.17 and put options at $0.29, for a total of $0.46.

What Is the Prediction for AMC Stock?

Turning to Wall Street, analysts have a Moderate Sell consensus rating on AMC stock based on two Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 60% decline in its share price over the past year, the average AMC price target of $3.73 per share implies 14.74% downside risk.

See more AMC analyst ratings