Why Marcus (MCS) Surged Today

NEW YORK (TheStreet) -- Shares of Marcus Corp.  (MCS) stock closed up 6.58% today after the operator of movie theaters, hotels and resorts today reported that third-quarter revenues ending February 27, 2014, increased 17% to $109.85 million, a 17.3% increase from revenues of $93.67 million for the third quarter of fiscal 2013. 

Operating income was $5.66 million for the third quarter of fiscal 2014, compared to an operating loss of $224,000 for the third quarter of fiscal 2013. 

Net earnings were $4.07 million for the third quarter of fiscal 2014, compared to a net loss of $1.37 million for the third quarter of fiscal 2013. 

Net earnings per diluted common share were 15 cents for the third quarter of fiscal 2014, compared to a net loss per diluted common share 5 cents for the third quarter of fiscal 2013.

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TheStreet Ratings team rates MARCUS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARCUS CORP (MCS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.6%. Since the same quarter one year prior, revenues slightly dropped by 0.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • MARCUS CORP's earnings per share declined by 29.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MARCUS CORP reported lower earnings of $0.62 versus $0.78 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.62).
  • MCS's debt-to-equity ratio of 0.83 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.26 is very low and demonstrates very weak liquidity.
  • You can view the full analysis from the report here: MCS Ratings Report
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