NEW YORK (TheStreet) -- Shares of Regal Entertainment Group (RGC) closed lower by 1.86% to $22.18 in Wednesday's trading session, after the company had its rating cut to "hold" from "buy" by analysts at Topeka Capital Markets this morning.

Analysts at the firm maintained its $24 price target, but cited under-performance for its downgrade.

Topeka analysts said the stock "has essentially performed in line with the requirements for its 'buy' rating, up 20% since upgrading on May 15, but closed yesterday only 6.2% shy of the price target."

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The Knoxville, TN-based Regal Entertainment Group is the parent company of Regal Entertainment Holdings, Inc. 

The company is engaged in the movie theater business, operating 6,614 screens in 527 theaters in 37 states and the District of Columbia. 

Separately, TheStreet Ratings team rates REGAL ENTERTAINMENT GROUP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate REGAL ENTERTAINMENT GROUP (RGC) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow."

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

  • RGC, with its decline in revenue, underperformed when compared the industry average of 9.4%. Since the same quarter one year prior, revenues fell by 14.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • REGAL ENTERTAINMENT GROUP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, REGAL ENTERTAINMENT GROUP increased its bottom line by earning $1.00 versus $0.93 in the prior year. For the next year, the market is expecting a contraction of 4.0% in earnings ($0.96 versus $1.00).
  • The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 18.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.84% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$27.90 million or 2690.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: RGC Ratings Report

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