Rating Change #9

Marcus Corporation ( MCS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 35.5% when compared to the same quarter one year prior, rising from $2.08 million to $2.82 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.3%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MARCUS CORP has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MARCUS CORP reported lower earnings of $0.46 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.46).
  • Net operating cash flow has decreased to $8.23 million or 24.70% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, MARCUS CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

The Marcus Corporation, together with its subsidiaries, owns and operates theatres, and hotels and resorts. The company has a P/E ratio of 22.1, equal to the average media industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Marcus has a market cap of $257.3 million and is part of the services sector and media industry. Shares are down 5% year to date as of the close of trading on Wednesday.

You can view the full Marcus Ratings Report or get investment ideas from our investment research center.

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