Leisure and recreation services company, AMC Entertainment Holdings, Inc. (NYSE:AMC) , is slated to report third-quarter 2016 results on Nov 7, after market close.
Last quarter, the company posted a negative earnings surprise of 17.24%. Moreover, the company’s earnings lagged the Zacks Consensus Estimate in two of the previous four quarters, with an average miss of 2.65%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that AMC Entertainment is likely to beat estimates because it has the right combination of two key elements.
Zacks ESP: AMC Entertainment has an Earnings ESP of +3.57%. This is because the Most Accurate estimate stands at 29 cents while the Zacks Consensus Estimate is pegged lower at 28 cents. This is a meaningful and leading indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: AMC Entertainment has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of AMC Entertainment’s Zacks Rank #3 and +3.57% ESP makes us confident of an earnings beat at the company. You can see the complete list of today’s Zacks #1 Rank stocks here.
What is Driving the Better-than-Expected Earnings?
AMC Entertainment operates as a theatrical exhibition company primarily in the U.S. and also internationally. It owns or has interests in theatres and screens worldwide. The company actively invests in renovation and refurbishing of multiplexes through enhancements like reclining seats, improved food and beverages, dine-in theaters and advanced sound and digital equipment.
AMC Theatres and Dolby Laboratories Inc. (NYSE:DLB) announced their strategic tie-up to expand the presence of Dolby Cinema to 100 at AMC operational sites by the end of 2017. The original agreement, signed in 2015, was for 100 auditoriums over a 10-year deployment. Moreover, AMC and Dolby are collaborating on expansion plans to increase the number of Dolby Cinema theaters at AMC locations beyond the initial 100. Currently, 22 Dolby Cinemas are operating at AMC locations all around U.S.
Meanwhile, being part of the entertainment industry exposes the company to macro-economic fluctuations.
Other Key Picks
Here are some other companies that have the right combination of elements to post an earnings beat this quarter.
Verizon Communications Inc. (NYSE:VZ) , with an Earnings ESP of +1.11% and a Zacks Rank #3. The company’s earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
Sprint Corp. (NYSE:S) , with an Earnings ESP of +14.29% and a Zacks Rank #3.The company’s earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
SPRINT CORP (S): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
DOLBY LAB INC-A (DLB): Free Stock Analysis Report
AMC ENTERTAINMT (AMC): Free Stock Analysis Report
Original post
Zacks Investment Research