Shares of AMC Entertainment Holdings Inc (NYSE: AMC) are receiving a lot of investor interest as of late due to the stock’s 25.6% increase over the prior three months. Shareholders are now asking themselves whether the company’s current stock price is reflective of its true value or if shares have even further upside from here.
Let’s take a look at AMC Entertainment’s value and outlook based on its most recent financial data to see if there are any catalysts for a price change.
What’s The Opportunity In AMC Entertainment?
Welcoming news for investors, AMC Entertainment is still trading at a fairly cheap price. According to our 3 valuation analyses, the intrinsic value for the stock is $22.42 per share and is currently trading at $17.49 in the market. This means that there is still an opportunity to buy now.
|Analysis||Model Fair Value||Upside (Downside)|
|Peer Revenue Multiples||$27.78||58.8%|
|Peer EBITDA Multiples||$20.90||19.5%|
|Dividend Discount Model (multi-stage)||$18.59||6.3%|
Click on any of the analyses above to view the latest model with real-time data.
AMC Entertainment’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta of 0.68. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can We Expect Growth From AMC Entertainment?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matters the most, a more compelling investment thesis would be high growth potential at a cheap price.
source: finbox.io data explorer
With EBITDA expected to grow on average of 10.2% over the next couple years, the future certainly appears bright for AMC Entertainment. It looks like higher cash flows are in the cards for shareholders, which should feed into a higher share valuation.
What This Means For Investors
Growth investors typically look to invest in companies that are expanding sales, gaining market share and building customer bases. On the other hand, value investors often argue that the most successful investments are in companies that deliver the highest cash flows while trading at the lowest valuation.
But why not put those hands together? A company that has both growth and value characteristics would certainly make the most attractive investment. So what did we find out about AMC Entertainment?
AMC Entertainment’s optimistic future growth does not appear to have been fully factored into the current share price with the stock still trading below its intrinsic value. Therefore, it may be a good time to purchase shares or increase your position in the company.
It is important to note that there are a variety of other fundamental factors that I have not taken into consideration in this article. If you have not done so already, I highly recommend that you complete your research on AMC Entertainment by taking a look at the following:
Valuation Metrics: how much upside do shares of AMC Entertainment have based on Wall Street’s consensus price target? Take a look at our analyst upside data explorer that compares the company’s upside relative to its peers.
Risk Metrics: how is AMC Entertainment’s financial health? Find out by viewing our financial leverage data metric which plots the dollars in total assets for each dollar of common equity over time.
Efficiency Metrics: is management becoming more or less efficient over time? Find out by analyzing the company’s asset turnover ratio which measures the dollars in revenue a company generates per dollar of assets.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
Matt can be reached at firstname.lastname@example.org.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.