Core Insights - The article emphasizes the importance of value investing, which focuses on identifying undervalued companies in the market [2][3] - It highlights the use of various metrics, such as P/S and P/CF ratios, to assess the value of stocks [4][5] Company Analysis: The Marcus (MCS) - MCS has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential as a value stock [3][7] - The P/S ratio for MCS is 0.79, significantly lower than the industry average of 1.12, suggesting it is undervalued [4] - MCS's P/CF ratio stands at 11.66, compared to the industry's average of 16.32, further indicating its attractive valuation [5] Company Analysis: UTD PARKS&RESRT (PRKS) - PRKS also holds a Zacks Rank of 2 (Buy) and a Value grade of A, making it another stock to consider for value investors [6][7] - The P/B ratio for PRKS is -6.38, contrasting sharply with the industry's price-to-book ratio of 4.43, indicating potential undervaluation [6] Conclusion - Both MCS and PRKS exhibit strong value characteristics based on their respective financial metrics, suggesting they are likely undervalued in the current market [7]

The Marcus Corporation (NYSE:MCS) Q4 2024 Results Conference Call February 27, 2025 11:00 AM ET Company Participants Gregory Marcus - Chairman, President and CEO Chad Paris - CFO and Treasurer Conference Call Participants Mike Hickey - The Benchmark Company Patrick Sholl - Barrington Research Chris Potter - Northern Border Investment Operator Good morning, everyone, and welcome to The Marcus Corporation Third Quarter Earnings Conference Call. My name is Lydia, and I'll be your operator today. [Operator Inst ...

Financial Data and Key Metrics Changes - The company reported consolidated revenues of $188 million for the fourth quarter, an over 16% increase compared to the same period last year [7] - Fourth quarter operating loss was $2.2 million, impacted by a $6.4 million noncash impairment charge in the theater division and $2.4 million of non-recurring expenses [7] - Adjusted EBITDA for the fourth quarter was nearly $26 million, a 42% increase over the prior year [7] - For the full year, consolidated revenues increased just under 1%, with operating income of $16.2 million negatively impacted by $6.8 million of non-cash impairment charges [8] Business Line Data and Key Metrics Changes - The theater division's fourth quarter revenue was $121.2 million, a nearly 23% increase compared to the prior year [9] - Comparable theater admission revenue increased by 15.4%, with attendance up 29.1% due to a stronger film slate [10] - The hotel division's fourth quarter revenue was $57.6 million, a 5.4% increase compared to the prior year, with RevPAR growing 3.6% [15][16] Market Data and Key Metrics Changes - U.S. box office receipts increased 22.9% during the fourth quarter compared to the previous year, indicating the company's theaters underperformed the industry by approximately 7.5 percentage points [12] - The upper upscale hotel segment experienced a RevPAR increase of 2.2% during the fourth quarter, indicating the company's hotels outperformed the industry by 1.4 percentage points [18] Company Strategy and Development Direction - The company plans to transition to a calendar fiscal year starting in fiscal 2025 to better align performance comparisons with industry peers [25] - Capital expenditures for fiscal 2025 are expected to be between $70 million and $85 million, focusing on hotel renovations and enhancing customer experience in theaters [22][23] - The company is committed to returning capital to shareholders, having returned $19 million or approximately 18% of cash from operations in fiscal 2024 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming film slate for 2025 and 2026, anticipating strong attendance growth driven by blockbuster films [35] - The hotel division is expected to see low to mid-single-digit RevPAR growth in 2025, supported by strong group business and improving business travel [43] - Management highlighted the importance of maintaining momentum in attendance through various promotional programs [30] Other Important Information - The company completed significant renovations in its hotel properties, including the Hilton Milwaukee, which is expected to enhance the quality of offerings for meeting and event planners [42] - The company is actively seeking growth investment opportunities in both the theater and hotel divisions [24][44] Q&A Session Summary Question: Thoughts on average ticket price and screen count growth - Management is closely monitoring pricing strategies and emphasizes attendance as a key driver of revenue [49][51] Question: Strategies to enhance per capita spend on concessions - Management believes digital ordering can increase basket size and enhance customer experience [60][63] Question: Impact of Movie Club on attendance and engagement - Management sees potential for the Movie Club to drive steady cash flow and enhance attendance [65][66] Question: Views on market share and capacity - Management believes they have the capacity to grow market share and are focused on executing their business strategy [73][75] Question: Leisure environment and its impact on overall views - Management noted a shift from leisure to more business and group travel, with their assets well-positioned to adapt [78][80]

Debt and Interest Rates - As of December 26, 2024, the company had zero variable interest rate debt outstanding, with a fixed interest rate debt totaling $160.4 million at a weighted-average interest rate of 5.93%[263][264] - The fixed interest rate debt includes senior notes with interest rates ranging from 4.02% to 7.02%, maturing between fiscal 2025 and 2034, and other debt instruments maturing in fiscal 2025[264] - The total fixed interest rate debt matures as follows: $10.4 million in fiscal 2025, $62 million in fiscal 2027, and $52.6 million thereafter, totaling $160.4 million[265] - The company has no outstanding interest rate swap agreements as of December 26, 2024, and manages exposure to interest rate changes through monitoring financing alternatives[265] - The company is exposed to market risk related to changes in interest rates and manages this risk by monitoring available financing alternatives[262] - Long-term debt as of December 26, 2024, was $149.01 million, a decrease from $159.55 million as of December 28, 2023[368] Financial Performance - Total revenues for the year ended December 26, 2024, were $735.56 million, a slight increase of 0.2% from $729.58 million in 2023[300] - Theatre admissions revenue decreased to $214.42 million in 2024 from $229.19 million in 2023, representing a decline of 6.4%[300] - Net earnings attributable to The Marcus Corporation for 2024 were a loss of $7.79 million, compared to a profit of $14.79 million in 2023[302] - Operating income for 2024 was $16.17 million, down from $33.93 million in 2023, reflecting a decrease of 52.3%[300] - Total costs and expenses increased to $719.39 million in 2024, up from $695.65 million in 2023, marking a rise of 3.4%[300] - The company reported a basic net loss per share of $0.25 for 2024, compared to earnings of $0.48 per share in 2023[300] - Comprehensive loss for the year was $6.63 million, compared to comprehensive income of $15.15 million in 2023[302] - The company experienced a pension gain of $1.20 million in 2024, compared to a gain of $0.49 million in 2023[302] Asset and Equity Changes - Total current assets decreased from $101.716 million as of December 28, 2023, to $92.150 million as of December 26, 2024, representing a decline of approximately 9.5%[297] - Cash and cash equivalents decreased from $55.589 million in 2023 to $40.841 million in 2024, a reduction of about 26.6%[297] - Total assets decreased from $1,065.103 million in 2023 to $1,044.528 million in 2024, a decline of approximately 1.9%[297] - Shareholders' equity attributable to The Marcus Corporation increased slightly from $472.675 million in 2023 to $474.241 million in 2024[297] - The Company’s retained earnings decreased from $281.599 million in 2023 to $265.028 million in 2024, a decline of about 5.9%[297] - The Company’s total liabilities decreased from $593.931 million in 2023 to $579.662 million in 2024, a decline of about 2.4%[297] Impairment and Valuation - During fiscal 2024, the company recorded before-tax impairment charges totaling $6.8 million related to four operating theatres and one permanently closed theatre[269] - Valuation allowances against deferred tax assets were $3.6 million as of December 26, 2024, down from $11.3 million as of December 28, 2023[270] - The company performed its annual goodwill impairment test as of September 27, 2024, and determined that no impairment was indicated as the fair value of the theatre reporting unit exceeded its carrying value[270] - The Company performed its annual goodwill impairment test as of September 27, 2024, and determined that the fair value of its goodwill was greater than its carrying value, indicating no impairment for both fiscal 2024 and fiscal 2023[331] - Impairment charges recorded during the year were $6,823,000, compared to $1,061,000 in the prior year, indicating increased asset impairment concerns[308] Cash Flow and Investments - Total adjustments to reconcile net loss to net cash provided by operating activities amounted to $111,727,000, an increase from $87,835,000 in the prior year[308] - Net cash provided by operating activities was $103,940,000, slightly up from $102,629,000 in the previous year[308] - Capital expenditures for the year were $79,210,000, significantly higher than $38,774,000 in the prior year[308] - Net cash used in investing activities totaled $81,898,000, compared to $36,749,000 in the previous year[308] - Proceeds from borrowings on revolving credit facility were $119,000,000, with an equal repayment of the same amount[308] - The company reported a net increase in cash, cash equivalents, and restricted cash of $15,259,000, a decrease from an increase of $35,332,000 in the previous year[308] - The company had cash, cash equivalents, and restricted cash of $44,579,000 at the end of the year, down from $59,838,000 at the beginning of the year[308] Segment Reporting and Revenue Recognition - The company adopted ASU No. 2023-07 for segment reporting, which requires incremental segment information disclosure on an annual and interim basis, effective for the first quarter of fiscal 2025[272] - Revenue from contracts with customers is recognized when the Company satisfies its performance obligations by transferring promised services to the customer[349] - Hotel/Resorts segment revenue increased to $287.51 million in fiscal 2024 from $270.84 million in fiscal 2023, reflecting a growth of 6.15%[351] - Other revenues, which include management fees and family entertainment center revenues, totaled $97.23 million in fiscal 2024, up from $85.42 million in fiscal 2023, marking a growth of 13.67%[351] - The company recognized $22.49 million in revenue from deferred revenues during fiscal 2024, compared to $18.59 million in fiscal 2023[359] - The company had deferred revenue of $36.35 million as of December 26, 2024, down from $38.03 million as of December 28, 2023[359] Shareholder and Stock Compensation - The Company has authorized the repurchase of up to 11,687,500 shares of Common Stock, with 1,714,682 shares available for repurchase as of December 26, 2024[394][395] - The Company has amended its Dividend Reinvestment Plan, authorizing the issuance of up to 250,000 shares of Common Stock, with 245,330 shares available under this authorization[396] - Total pre-tax share-based compensation expense was $8,206 in fiscal 2024, compared to $6,394 in fiscal 2023 and $8,170 in fiscal 2022[398] - The intrinsic value of options outstanding at December 26, 2024, was $6,804, while the intrinsic value of options exercisable was $3,155[401] - As of December 26, 2024, total remaining unearned compensation cost related to stock options was $1,582, which will be amortized over a remaining weighted-average life of 1.8 years[401] - The Company granted 476 shares of restricted stock in fiscal 2024, with a weighted average fair value of $15.18[403] - Total remaining unearned compensation cost related to restricted stock was $4,565, to be amortized over a weighted-average remaining service period of 2.9 years[403] - The Company granted 143 performance stock units (PSUs) in fiscal 2024, with a weighted average fair value of $14.84[407] - Total remaining unearned compensation cost related to PSUs was $1,375, which will be amortized over a weighted-average remaining service period of 2.0 years[407] Pension and Benefit Obligations - The Company recorded a net unrecognized actuarial loss for pension obligation of $(181) thousand as of December 26, 2024, down from $(1,336) thousand as of December 28, 2023[344] - The benefit obligation at the end of fiscal 2024 was $34,983, down from $36,349 at the end of fiscal 2023[412] - The accumulated benefit obligation was $34,480 as of December 26, 2024, compared to $34,788 as of December 28, 2023[414] - The pre-tax change in the benefit obligation recognized in other comprehensive loss for the year ended December 26, 2024, was a total of $(1,563) thousand, compared to $(592) thousand for the year ended December 28, 2023[415] - The weighted-average discount rate used to determine benefit obligations increased from 5.00% in 2023 to 5.45% in 2024, while the rate of compensation increase remained constant at 4.00%[415] - Expected benefit payments for fiscal year 2025 are projected to be $2,377 thousand, with total expected payments from 2025 to 2029 amounting to $12,024 thousand[416] Taxation - The net deferred tax liability decreased from $(32,235) thousand as of December 28, 2023, to $(28,663) thousand as of December 26, 2024[417] - The effective income tax rate for fiscal 2024 was 23.7%, a decrease from 31.7% in fiscal 2023, influenced by a $7,755 thousand decrease in the valuation allowance for state net operating loss carryforwards[418] - The company reported net income taxes paid of $1,428 thousand in fiscal 2024, down from $1,776 thousand in fiscal 2023[420] Commitments and Joint Ventures - The company has commitments for construction at various properties totaling approximately $31,569 thousand as of December 26, 2024[423] - The company formed a joint venture in March 2024 to acquire the Loews Minneapolis Hotel, investing $5,620 thousand for a 33.3% equity interest[425] - The company held investments with aggregate carrying values of $5,166 thousand in joint ventures as of December 26, 2024, up from $1,718 thousand in 2023[424] - The company operates two hotels under the Hilton trademark and two under the Marriott trademark, with obligations to pay fees based on defined gross sales[423]

Group 1: Earnings Performance - Marcus reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, compared to a loss of $0.05 per share a year ago, representing an earnings surprise of 18.18% [1] - The company posted revenues of $188.31 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.70%, and up from $161.53 million year-over-year [2] - Over the last four quarters, Marcus has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Marcus shares have declined approximately 2.9% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is -$0.43 on revenues of $151.3 million, and $0.46 on revenues of $774.9 million for the current fiscal year [7] Group 3: Industry Context - The Leisure and Recreation Services industry, to which Marcus belongs, is currently ranked in the top 16% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5] - The Zacks Rank for Marcus is currently 1 (Strong Buy), indicating expectations for the stock to outperform the market in the near future [6]

Revenue Performance - Total revenues for fiscal 2024 were $735.6 million, a 0.8% increase from $729.6 million in fiscal 2023[4] - Fourth quarter total revenues were $188.3 million, a 16.6% increase from $161.5 million in the same quarter of fiscal 2023[4] - Marcus Theatres reported total revenues of $447.7 million for fiscal 2024, down from $458.4 million in fiscal 2023[8] - Marcus Hotels & Resorts achieved total revenues of $248.3 million for fiscal 2024, a 6.4% increase compared to fiscal 2023[13] - Theatre admissions revenue for the 13 weeks ended December 26, 2024, was $56,265,000, an increase of 15% from $48,912,000 in the same period last year[25] - Total revenues for the 52 weeks ended December 26, 2024, reached $735,560,000, compared to $729,575,000 for the previous year, reflecting a slight increase of 0.4%[25] Adjusted EBITDA - Adjusted EBITDA for the fourth quarter was $25.9 million, a 41.9% increase from $18.2 million in the prior year quarter[4] - Adjusted EBITDA for the 13 weeks ended December 26, 2024, was $25,881,000, up from $18,237,000 in the same period last year, representing a growth of 42%[31] - Adjusted EBITDA for the 13 weeks ended December 26, 2024, was $25,881,000, an increase from $18,237,000 in the same period of 2023, representing a growth of 42.1%[36] Operating Income and Loss - Operating income for Marcus Theatres was $22.1 million in fiscal 2024, down from $36.2 million in fiscal 2023, impacted by $6.8 million in impairment charges[8] - Operating income for the theatre segment for the 13 weeks ended December 26, 2024, was $3,344,000, compared to $3,469,000 in the same period last year[31] - The total operating income for the 52 weeks ended December 26, 2024, was $16,170,000, compared to a loss of $24,454,000 for the same period in 2023[38] Net Income and Loss - Net loss for fiscal 2024 was $7.8 million, compared to net earnings of $14.8 million in fiscal 2023[9] - The net loss for the 52 weeks ended December 26, 2024, was $7,787,000, compared to a net income of $14,794,000 for the previous year[25] - Net earnings for the 13 weeks ended December 26, 2024, were $986,000, compared to a loss of $1,440,000 for the same period in 2023[36] Cash Flow and Assets - Cash and cash equivalents decreased to $40,841,000 as of December 26, 2024, down from $55,589,000 a year earlier[26] - The company reported a net cash flow from operating activities of $52,566,000 for the 13 weeks ended December 26, 2024, compared to $33,987,000 for the same period last year[33] - Total assets decreased to $1,044,528,000 as of December 26, 2024, from $1,065,103,000 a year earlier[26] Capital Expenditures and Renovations - Capital expenditures for the 52 weeks ended December 26, 2024, totaled $79,210,000, significantly higher than $38,774,000 in the previous year[33] - Marcus Hotels & Resorts announced a $40 million renovation at the Hilton Milwaukee, expected to be completed in the first half of 2025[15] Impairment and Other Expenses - Impairment charges for the 13 weeks ended December 26, 2024, were $6,351,000, compared to $377,000 in the same period of 2023, reflecting a significant increase[36] - Other non-recurring expenses for the 13 weeks ended December 26, 2024, amounted to $2,400,000, while there were no such expenses reported in the same period of 2023[39] Interest Expense - The company reported interest expense of $2,812,000 for the 13 weeks ended December 26, 2024, down from $3,751,000 in the same period of 2023, indicating a decrease of 25.1%[36] - The company reported a total of $10,972,000 in interest expense for the 52 weeks ended December 26, 2024, down from $12,721,000 in the previous year, indicating a reduction of 13.8%[36] Company Operations - The company operates 985 screens at 78 locations across 17 states, maintaining its position as the fourth largest theatre circuit in the U.S.[22] - Revenue per available room (RevPAR) increased by 3.6% at comparable company-owned hotels in the fourth quarter of fiscal 2024[12] - The total depreciation and amortization expense for the 52 weeks ended December 26, 2024, was $67,958,000, slightly up from $67,301,000 in the previous year[36] - The company incurred share-based compensation expenses of $1,049,000 for the 13 weeks ended December 26, 2024, compared to $1,394,000 in the same period of 2023, a decrease of 24.7%[38] - The company reported equity losses from unconsolidated joint ventures of $158,000 for the 13 weeks ended December 26, 2024, compared to $22,000 in the same period of 2023[36]

Group 1 - The market anticipates Marcus (MCS) to report a year-over-year earnings increase driven by higher revenues for the quarter ended December 2024, with earnings expected to be $0.11 per share, reflecting a +320% change, and revenues projected at $187 million, up 15.8% from the previous year [1][3] - The stock price may rise if the actual earnings exceed expectations in the upcoming report scheduled for February 27, while a miss could lead to a decline [2] - The consensus EPS estimate for Marcus has been revised 17.81% lower in the last 30 days, indicating a reassessment by analysts [4] Group 2 - The Zacks Earnings ESP model shows that the Most Accurate Estimate for Marcus aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [10][11] - Despite a Zacks Rank of 1 (Strong Buy), the lack of a positive Earnings ESP reading makes it challenging to predict a beat for Marcus [11] - Historical performance indicates that Marcus has beaten consensus EPS estimates in two out of the last four quarters, with a notable surprise of +69.57% in the last reported quarter [12][13] Group 3 - AMC Entertainment, another player in the leisure and recreation services industry, is expected to report earnings of $0.16 per share for the same quarter, representing a +70.4% year-over-year change, with revenues anticipated at $1.29 billion, up 16.5% [17] - The consensus EPS estimate for AMC has been revised 17.2% higher in the last 30 days, leading to a positive Earnings ESP of 2.04%, suggesting a likely earnings beat [18]

Core Viewpoint - Marcus (MCS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell accordingly, thus affecting stock prices [4]. Company Performance and Outlook - The recent upgrade for Marcus suggests an improvement in the company's underlying business, which is expected to be reflected in a higher stock price as investors respond positively to this trend [5]. - Over the past three months, the Zacks Consensus Estimate for Marcus has increased by 14.7%, indicating a positive shift in earnings expectations [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - The upgrade of Marcus to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Marcus (MCS) - Marcus currently holds a Momentum Style Score of B, indicating a favorable momentum characteristic [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - Over the past week, Marcus shares increased by 1.24%, while the Zacks Leisure and Recreation Services industry rose by 2.05% [6] - In a longer timeframe, Marcus's monthly price change is 32.23%, significantly outperforming the industry's 8.13% [6] - Over the last quarter, Marcus shares have surged by 55.69%, and by 53.09% over the past year, compared to the S&P 500's increases of 7.42% and 32.55%, respectively [7] Trading Volume - The average 20-day trading volume for Marcus is 380,603 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - Recent earnings estimate revisions for Marcus show 2 upward revisions and none downward for the full year, raising the consensus estimate from -$0.54 to -$0.23 [10] - For the next fiscal year, there have also been 2 upward revisions with no downward changes [10] Conclusion - Considering the positive momentum indicators and earnings outlook, Marcus is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [11][12]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer approach may involve investing in bargain stocks that have recently shown price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Case Study - Marcus (MCS) - Marcus (MCS) has demonstrated significant price momentum, with a four-week price change of 32.5%, indicating growing investor interest [4] - Over the past 12 weeks, MCS has gained 54.8%, with a beta of 1.48, suggesting it moves 48% more than the market [5] - MCS has a Momentum Score of B, indicating a favorable entry point for investors looking to capitalize on its momentum [6] Group 3: Earnings Estimates and Valuation - MCS has received a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which typically attract more investor interest [7] - The stock is currently trading at a Price-to-Sales ratio of 0.97, suggesting it is undervalued as investors pay only 97 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides MCS, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]