New book by Larry Connors Click here Improve your trading - See how
Shares of the Columbus-based movie theater chain were hammered on the Nasdaq exchange, plunging $2.98, or 31 percent, to $6.60 in heavy trading a day after reporting a $20.7 million loss on flat revenue of $122.4 million in the third quarter. The number of shares that changed hands Tuesday was more than 13 times higher than the daily average of about 51,000.
Carmike executives did not return calls for comment Tuesday.
Earlier in the day, San Francisco-based research and brokerage firm downgraded Carmike from "buy" to "neutral," essentially advising investors to not necessarily dump the stock, but hold off on purchasing more shares.
Minneapolis-based investment bank PiperJaffray maintained its "neutral" rating and $9 per share price target on the motion picture exhibitor, albeit with a caveat.
"While we see 3D and the benefits of circuit upgrades driving above-industry revenue growth in 2010, we prefer to remain on the sidelines with this (company) until management is able to rein in operating expense growth and theatre improvements begin to translate into positive cash flow momentum," James Marsh, a senior research analyst with PiperJaffray, wrote in an investment note Tuesday.
Marsh pointed out that Carmike missed Wall Street analysts' consensus estimate of 14 cents per share. The company posted a loss of $1.63 per share, but most of that was because of a one-time, non-cash write-off of $17.2 million because of increased competition in eight markets in which Carmike does business, and a decline in the value of some older projection equipment.
Without the write-off, earnings would have been down 26 cents per share.
A "surprising" 13 percent increase in theater operating costs appeared to generate the most concern from Marsh. In its earnings report, Carmike said the extra costs were related to new theater openings, higher repair and maintenance costs, an increase in 3D equipment service charges, and surging salary and wage expenses, partly because of this year's minimum wage hike.
"Looking forward, we are increasing our 'other theatre' expense forecasts for the balance of 2009 and 2010," Marsh wrote, though he expects theater maintenance costs to subside at the end of this year.
Carmike, the nation's fourth largest motion picture exhibitor, with 246 movie theaters in 35 states, reported theater-level cash flow of $16.7 million in the third quarter, down from $22.9 million during the same three-month period a year ago.
The company also is grappling with a large debt load. On Tuesday, it reported total debt of nearly $375 million, down from $392 million at the end of 2008.
In recent years, Carmike has invested heavily in new equipment at its movie houses, transforming them from the old 35mm format to digital projection that allows for sharper pictures and much more entertainment variety, including concerts and sporting events.
To see more of the Columbus Ledger-Enquirer, or to subscribe to the newspaper, go to http://www.ledger-enquirer.com. Copyright (c) 2009, Columbus Ledger-Enquirer, Ga. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.
