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Bear of the Day: Regal Entertainment Group (RGC)

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Though Hollywood has produced some solid films as of late, the overall picture for the movie industry isn’t as bright as it used to be. This is especially true if we look to some of the major theater operators, such as Regal Entertainment Group (RGC).

Regal recently reported earnings, and it once again missed estimates. In fact, this is actually the second straight double digit percentage miss on the bottom line for RGC, while it missed on the top line this quarter too.

Earnings are also down in year-over-year terms, so better days have clearly been in the industry before. But, with some nice box office performances in recent days, will it be enough to turn things around for RGC and the rest of the space? Let’s take a look at some of the recent estimates for a guide.

RGC Estimates

Unfortunately for investors, RGC estimates have been moving lower in recent days, including several analyst cuts in the past week alone. And for the full year period, we haven’t seen a single estimate increase in the past sixty days, nor have we for the following year either.

But it isn’t like analysts are just taking a penny or two off of their estimates, as the consensus has dramatically declined in recent weeks. The current quarter consensus has crumbled by 19% in the past two months, while we see a double-digit percentage decline to the full year estimate too.

Regal Entertainment Group Price, Consensus and EPS Surprise

Regal Entertainment Group Price, Consensus and EPS Surprise | Regal Entertainment Group Quote

It is also worth noting that the industry has a rank in the bottom third, so it isn’t as though these are problems that are exclusive to Regal. If anything, a broadly weak box office environment—and particularly compared to last year— as well as a sluggish leisure space in general, are hampering investor demand in this space, especially with the bevy of other quality entertainment options out there (such as the boom in quality television programing lately).

For these reasons, it shouldn’t be surprising to note that we believe more pain is ahead for RGC, and that investors may want to wait before jumping in here. The stock currently has a Zacks Rank #5 (Strong Sell) so there are plenty of better stock choices out there for investors.

Other Picks

If you want a different selection in the leisure world, a look to the cruise market could be a good idea. Two companies in this area both have a Zacks Rank #2 (Buy) rating, and may be better choices in the near term.

In particular, both Norwegian Cruise Line ((NCLH - Free Report) ) and Royal Caribbean ((RCL - Free Report) ) stand out in this environment, as each member of the duo has a better track record for beating earnings, while they both have better estimate trends too. So, if you are looking for a different play in the leisure market in the near-term, definitely give one of the cruise players a closer look over RGC, at least until the box office space turns around.


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