Critical Analysis: AMC Entertainment (AMC) & Reading International (RDI)

AMC Entertainment (NYSE: AMC) and Reading International (NASDAQ:RDI) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Profitability

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This table compares AMC Entertainment and Reading International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AMC Entertainment -9.59% -6.04% -1.47%
Reading International 11.08% 8.22% 3.40%

Volatility and Risk

AMC Entertainment has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Reading International has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Valuation and Earnings

This table compares AMC Entertainment and Reading International’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AMC Entertainment $5.08 billion 0.41 -$487.20 million ($0.89) -18.48
Reading International $279.73 million 1.36 $30.99 million $1.30 12.59

Reading International has lower revenue, but higher earnings than AMC Entertainment. AMC Entertainment is trading at a lower price-to-earnings ratio than Reading International, indicating that it is currently the more affordable of the two stocks.

Dividends

AMC Entertainment pays an annual dividend of $0.80 per share and has a dividend yield of 4.9%. Reading International does not pay a dividend. AMC Entertainment pays out -89.9% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current recommendations and price targets for AMC Entertainment and Reading International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AMC Entertainment 1 4 8 0 2.54
Reading International 0 0 2 0 3.00

AMC Entertainment presently has a consensus target price of $23.68, suggesting a potential upside of 43.96%. Reading International has a consensus target price of $23.50, suggesting a potential upside of 43.56%. Given AMC Entertainment’s higher probable upside, analysts clearly believe AMC Entertainment is more favorable than Reading International.

Insider & Institutional Ownership

43.8% of AMC Entertainment shares are held by institutional investors. Comparatively, 36.5% of Reading International shares are held by institutional investors. 0.8% of AMC Entertainment shares are held by insiders. Comparatively, 25.6% of Reading International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Reading International beats AMC Entertainment on 10 of the 16 factors compared between the two stocks.

AMC Entertainment Company Profile

AMC Entertainment Holdings, Inc. is a holding company. The Company, through its subsidiaries, including AMC Entertainment Inc. (AMCE), American Multi-Cinema, Inc. (OpCo) and its subsidiaries, is engaged in the theatrical exhibition business. It operates through theatrical exhibition operations segment. It licenses first-run motion pictures from distributors owned by film production companies and from independent distributors. The Company also offers a range of food and beverage items, which include popcorn; soft drinks; candy; hot dogs; specialty drinks, including beers, wine and mixed drinks, and made to order hot foods, including menu choices, such as curly fries, chicken tenders and mozzarella sticks. It operates over 900 theatres with approximately 10,000 screens globally, including over 661 theatres with approximately 8,200 screens in the United States and over 244 theatres with approximately 2,200 screens in Europe. The Company’s subsidiary also includes Carmike Cinemas, Inc.

Reading International Company Profile

Reading International, Inc. engages in the ownership, development, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. The company operates in two segments, Theatrical Motion Picture Exhibition (Cinema Exhibition) and Real Estate. The Cinema Exhibition segment operates multiplex cinemas. This segment operates its cinema exhibition businesses under the Reading Cinemas, Angelika Film Centers, Consolidated Theatres, City Cinemas, and Rialto brands. The Real Estate segment owns, develops, rents, or licenses retail, commercial, and live theater assets. As of December 31, 2017, the company had interests in 58 cinemas comprising approximately 473 screens; fee interests in 3 live theaters; fee interest in 1 cinema in New York City; fee interests in 2 cinemas in Australia and 4 cinemas in New Zealand; fee interest in Union Square property; entertainment-themed centers; interest in 70.4 acres of vacant land; interest in 202 acres of vacant land; fee interest in 2 office buildings; and fee ownership of approximately 20.7 million square feet of developed and undeveloped real estate assets. Reading International, Inc. was founded in 1937 and is headquartered in Culver City, California.

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