Carmike Cinemas Inc. Stock Downgraded (CKEC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Carmike Cinemas (Nasdaq: CKEC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and revenue growth. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.

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Highlights from the ratings report include:
  • Compared to other companies in the Media industry and the overall market, CARMIKE CINEMAS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for CARMIKE CINEMAS INC is rather low; currently it is at 17.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.44% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $5.82 million or 41.48% 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.
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Carmike Cinemas, Inc., together with its subsidiaries, operates as a motion picture exhibitor in the United States. The company operates digital cinema and three-D cinema theatres that show films on a first-run basis; and discount theatres primarily serving small to mid-size non-urban markets. The company has a P/E ratio of 3.3, below the S&P 500 P/E ratio of 17.7. Carmike Cinemas has a market cap of $314.4 million and is part of the services sector and media industry. Shares are up 17.5% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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