Earnings estimates have been plummeting for Carmike Cinemas (CKEC –Snapshot Report) following disappointing Q3 results.
The movie theater company experienced a big drop in attendance last quarter due in part to a weak domestic box office. This led to declining profit margins and negative earnings estimates revisions. Carmike is a Zacks Rank #5 (Strong Sell).
And while shares have sold off heavily recently, they still do not look like a value at 25x forward earnings.
Carmike Cinemas is a motion picture exhibitor with 278 theatres in 41 states. It is headquartered in Columbus, Georgia and has a market cap of $653 million.
Third Quarter Results
Carmike reported disappointing third quarter results on November 4. Adjusted earnings per share came in at a loss of $0.19, well below the Zacks Consensus Estimate of +$0.02. It was also significantly below EPS of +$0.16 in the same quarter last year.
Total operating revenues declined 1% year-over-year to $162.6 million despite 13% more screens on average in the quarter due to an acquisition. This missed the consensus of $168.0 million. Admission revenue fell 2% due in part to a weaker-than-expected domestic box office. This was somewhat offset by 1% growth in Concessions & Other, which accounted for 38% of total operating revenues in the quarter.
Average attendance per screen plunged 17% year-over-year to 5,069. Admission per patron rose 3.4% to $6.98 while average concessions/other sales per patron jumped 6.4%.
Meanwhile, the adjusted EBITDA margin fell 590 basis points to 11.3% of total operating revenues.
Estimates Plunging
Following disappointing Q3 results, analysts revised their estimates significantly lower for both 2014 and 2015. This sent the stock to a Zacks Rank #5 (Strong Sell).
The 2014 Zacks Consensus Estimate is currently $0.15, down from $0.52 before the report. The 2015 is now $1.11, down from $1.33 over the same period.
Lofty Valuation
Although shares of Carmike have fallen significantly over the last several months, it still doesn't look a value here. The stock trades at more than 25x 12-month forward earnings, well above its 10-year median of 17x. And its enterprise value to cash flow multiple of 17x is also well above its historical multiple of 12x.
