AMC Entertainment Continues To Score In And Out Of The Box Office (NYSE:AMC) | Seeking Alpha

Join the community built by investors, for investors. Create your free account " Back in July of this year, I finally made the decision to upgrade shares of AMC Entertainment Holdings (AMC) from a 'hold' to a 'buy.' Honestly, I never thought that would happen. In prior years, I had been very bearish about the business. Large amounts of debt, combined with weakness caused by the COVID-19 pandemic, had me feeling at one point that the company might go under. And during the time that I had been bearish about it, the stock had fallen significantly. But as time progressed, box office receipts ended up improving. Management cut costs, and attendance returned. The firm still has more debt than I would like it to have. But on the whole, I am very pleased with the developments that we are seeing. The great thing is that, since I upgraded the stock, shares have jumped 19.4% while the S&P 500 is up only 3.1%. It's also worth noting that, on November 6th, the management team at the business will be announcing financial results covering the third quarter of the company's 2026 fiscal year. Revenue and profitability are both forecasted to improve drastically year over year. Furthermore, new data and estimates regarding the North American box office are proving to be supportive of the industry itself. So unless something big and unexpected comes out of the woodwork, I think it would be premature to downgrade the company at this time. Shares Offer More Upside In my last article about AMC Entertainment Holdings, I already covered detailed financial performance for the second quarter of the company's 2026 fiscal year. As such, I think it would be redundant to dig too much into those figures. Instead, I think just a very brief review of those findings is needed. In the chart above, you can see key financial metrics for the quarter in question compared to the previous year, as well as for the first half of 2026 compared to the same time of 2025. The company benefited during this time from an increase in overall spending, both on tickets and on food and beverages. This includes the US and international markets. As the chart below illustrates, we also saw some nice improvements when it came to overall attendance. The attendance data is particularly encouraging. And what's really great is that things have gotten even better since then. In my previous article, I showed how, for the first 28 weeks of the year, the North American box office had seen overall spending rise 9.4%. And for the second quarter of the year, it was up 7% compared to the same time a year earlier. The picture has gotten so much better since then. In the table below, you can see that total spending for the first 40 weeks of the year came out to $7.78 billion. That's 20.5% higher than the $6.45 billion spent the year prior. And for the third quarter of 2026, the $2.98 billion spent at the domestic box office ended up being 31.1% greater than the $2.27 billion that consumers spent the year prior. Other parties have established a favorable trend when it comes to the box office. Take Wedbush Securities as an example. They recently claimed that the recovery in the movie theater sector will continue thanks to a normalized film pipeline, premium format demand, and an increase in customer spending. The end results should be greater revenue, margins, and cash flows. That's the case even if attendance never returns back to the levels that we saw prior to the COVID-19 pandemic. They actually believe that total box office spending in North America this year will be about $10.5 billion. That represents an upward revision from the $10 billion previously forecasted. And for 2027, they expect a number of major films, such as Legend of Zelda, Minecraft Movie Squared, Frozen III, and Star Wars: Starfighter, to push the North American box office even more to about $10.6 billion. This would represent a major milestone. According to Box Office Mojo, in 2018, the domestic box office hit an all-time high of $11.89 billion. So we are still unfortunately below that peak. However, box office revenue did plummet to as low as $2.11 billion in the year 2020. That was during the height of the COVID-19 pandemic. What should have been a speedy recovery was gummed up by other challenges, including actor and other worker strikes over things like pay and worries regarding the use of AI by Hollywood. But with those issues now resolved, there is a chance for the box office to continue growing. I am a bit skeptical about such lofty forecasts, though, simply because economic conditions are deteriorating. But in general, I am bullish about the long-term outlook regarding the box office. So far, there have been a few films that have done exceptionally well in the US market. At the top of the list would be Spider-Man: Brand New Day, which has so far generated $957.4 million in the domestic box office. Globally, it has hit $2.51 billion. The Odyssey, which I saw despite not being a big movie fan, has gone on to generate $623.9 million domestically. And the total global box office for it has been $1.78 billion. Frankly, it was a phenomenal film. We also have to take into consideration Toy Story 5, which generated $480.3 million domestically and $1.15 billion globally. There are other examples as well, but you get the idea. For its part, AMC Entertainment Holdings is doing a phenomenal job to try and take advantage of growth in the box office. On September 8th, the management team announced plans to present an exclusive live broadcast of Epic Games' 2026 Rocket League World Championship Finals at fifty of its locations. I know that is rather small, but it illustrates just how innovative management has become. Leaning into highly anticipated live events is definitely a strategy that the company can use in order to achieve some incremental revenue. And to draw viewers in the door, the company even unveiled a commemorative ticket bearing a code that would allow users to redeem in game cosmetics. That's absolutely a way to get people participating in an event that they might otherwise watch at home. On August 31st, management announced a new distribution venture called Leawood Films. This is a new film distribution company that the firm launched with the goal of bringing more movies to be distributed onto the big screen. Instead of plowing large amounts of capital into big-budget films, Leawood Films will take a low-risk approach by working with established and emerging filmmakers who can secure full financing for their own films, with the idea being that, once completed, those films will be shown at its movie theaters. This builds off of the company's success leading up to this point regarding other interesting distribution initiatives, such as Taylor Swift's The Eras Tour. Earlier this month, the company partnered up with Hoyt Games to launch the AMC Movie Trivia Game Show App, which management described as the company's first ever mobile game. Initially, it features four new movie-themed puzzles each day, as well as thousands of additional movie trivia challenges. This is in a bid to achieve greater stickiness with its customer base. And in early August, management said that, thanks to Spider-Man: Brand New Day, the company saw 10.2 million moviegoers attend one of its theaters in the US and in its international markets for the Wednesday through Sunday window of time that represented the debut of the film. This was actually the highest weekend revenue mark in the company's history. The firm has also been working hard on tackling its balance sheet. The business ended the second quarter of the year with $3.19 billion of net debt. On October 5th, the firm announced that it successfully completed a refinancing of $3.97 billion of debt that included offering $2 billion of notes now due in 2031 and $850 million in the form of a term loan, not to mention other financing. This helps to extend the maturity of its debt. Now, the company has refinanced 97% of its debt, pushing almost all debt maturities until between October of 2031 and October of 2033. This gives it additional breathing room to benefit from strength in the domestic box office. Of course, only time will tell how things will turn out. But the good news is that, on November 6th, management will be announcing financial results covering the third quarter of the company's 2026 fiscal year. As the table above illustrates, analysts believe that sales will grow from $1.30 billion last year to $1.52 billion this year. They expect the firm to swing from a sizable net loss to a modest net gain. I will be particularly interested to see what cash flows ultimately end up coming in at. That's because, as the chart below illustrates, the company does not really need to generate much in the way of cash flow in order for the business to be even fairly valued. For the first half of this year, the business generated EBITDA of $359.7 million. If it can grow annual EBITDA to be about double that, we would be looking at an EV-to-EBITDA multiple of just 8. That is completely defensible and may even be, in some respects, rather cheap. Takeaway Based on the data available right now, I believe that the market is underestimating AMC Entertainment Holdings. The company is in a better position now than it was in the past. The box office is certainly working its magic. Management is proving to be innovative and seeking ways to capture incremental revenue while simultaneously repositioning the company for long-term success. And when you add all of this together, it strikes me as a compelling prospect. Because of this, I have no problem reaffirming it as a 'buy' candidate right now. Daniel is an avid and active professional investor. He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. 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AMC Entertainment Continues To Score In And Out Of The Box Office (NYSE:AMC) | Seeking Alpha

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