AMC Entertainment (AMC) Stock Falling on DOJ Document Request

NEW YORK (TheStreet) -- Shares of AMC Entertainment (AMC) are down by 6.26% to $27.10 in mid-morning trading on Monday, following reports that the Justice Department has requested that the movie theater company turn over documents related to an antitrust review of the theater industry.

DOJ authorities are looking into whether or not three large theater chains, AMC, Regal Entertainment (RGC), and Cinemark (CNK) have been abusing their market power by keeping smaller, independent rival theaters from receiving big name movie releases, The Hollywood Reporter says.

The DOJ has has submitted a request for "the production of documents and answers to interrogatories concerning potentially anticompetitive conduct, including film clearances and participation in certain joint ventures," AMC said, Hollywood Reporter said.

"We do not believe the company has violated federal or state antitrust laws and are cooperating with the relevant governmental authorities. However, we cannot predict the ultimate scope, duration or outcome of these investigations," AMC continued.

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

"We rate AMC ENTERTAINMENT HOLDINGS (AMC) 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. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and generally higher debt management risk."

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

  • AMC's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 4.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 236.2% when compared to the same quarter one year prior, rising from -$4.51 million to $6.14 million.
  • AMC ENTERTAINMENT HOLDINGS reported significant earnings per share improvement 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, AMC ENTERTAINMENT HOLDINGS reported lower earnings of $0.65 versus $3.83 in the prior year. This year, the market expects an improvement in earnings ($1.27 versus $0.65).
  • The gross profit margin for AMC ENTERTAINMENT HOLDINGS is currently extremely low, coming in at 14.75%. Regardless of AMC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AMC's net profit margin of 0.93% is significantly lower than the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Media industry and the overall market, AMC ENTERTAINMENT HOLDINGS's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: AMC Ratings Report

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