AMC Entertainment (NYSE:AMC) Reports Strong Q3

Theater company AMC Entertainment (NYSE:AMC) announced better-than-expected revenue in Q3 CY2025, but sales fell by 3.6% year on year to $1.3 billion. Its non-GAAP loss of $0.21 per share was in line with analysts’ consensus estimates.

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• Revenue: $1.3 billion vs analyst estimates of $1.22 billion (3.6% year-on-year decline, 6.3% beat)

• Adjusted EPS: -$0.21 vs analyst estimates of -$0.22 (in line)

• Adjusted EBITDA: $122.2 million vs analyst estimates of $96.36 million (9.4% margin, 26.8% beat)

• Operating Margin: 2.8%, down from 5.3% in the same quarter last year

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• Free Cash Flow was -$81.1 million compared to -$92.2 million in the same quarter last year

• Market Capitalization: $1.29 billion

With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE:AMC) operates movie theaters primarily in the US and Europe.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, AMC Entertainment grew its sales at a 14% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. AMC Entertainment’s recent performance shows its demand has slowed as its annualized revenue growth of 1.8% over the last two years was below its five-year trend. Note that COVID hurt AMC Entertainment’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

This quarter, AMC Entertainment’s revenue fell by 3.6% year on year to $1.3 billion but beat Wall Street’s estimates by 6.3%.

Looking ahead, sell-side analysts expect revenue to grow 8.9% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.

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AMC Entertainment’s operating margin has been trending up over the last 12 months, but it still averaged negative 2.7% over the last two years. This is due to its large expense base and inefficient cost structure.

In Q3, AMC Entertainment generated an operating margin profit margin of 2.8%, down 2.6 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although AMC Entertainment’s full-year earnings are still negative, it reduced its losses and improved its EPS by 62% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

In Q3, AMC Entertainment reported adjusted EPS of negative $0.21, down from negative $0.04 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 2.3%. Over the next 12 months, Wall Street expects AMC Entertainment to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.97 will advance to negative $0.41.

We were impressed by how significantly AMC Entertainment blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $2.52 immediately following the results.

Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.