On Wednesday, Benchmark upgraded the price target for Marcus Corp (NYSE:MCS) shares from $18.00 to $20.00, while maintaining a Buy rating on the stock. The firm's decision comes in response to Marcus Corp's stronger-than-expected performance in the domestic box office during the third quarter of 2024.
Benchmark now anticipates a 3.5% increase in box office admissions for Marcus Corp's fiscal quarter, a significant shift from the previously projected 8% decline. The company's recent actions to retire their convertible debt were also highlighted as a positive step towards simplifying their balance sheet and mitigating the risk of potential dilution to shareholders.
The analyst from Benchmark expressed confidence in the valuation of Marcus Corp's stock, deeming it undervalued when compared to historical targets. The firm also pointed to several growth catalysts that could further enhance the company's market position.
For the fiscal year 2024, Benchmark estimates that Marcus Corp will achieve an EBITDA of $86 million. Applying a 9x EBITDA multiple led to the increased price target. The analyst reiterated the Buy rating, signaling continued optimism about the company's financial prospects and stock performance.
In other recent news, The Marcus Corporation has made significant financial moves, including repurchasing $13.5 million in aggregate principal amount of its 5.00% Convertible Senior Notes due in 2025. The company also arranged to terminate a portion of its existing capped call transactions, expecting to receive approximately $4.6 million in cash settlements from this termination.
In addition, Marcus Corporation has declared a regular quarterly cash dividend payment for its common and Class B stocks, with shareholders receiving $0.07 per share for common stock and $0.064 per share for Class B stock.
The company also reported a 15% decrease in consolidated revenues to $176 million in the second quarter of fiscal 2024, with the Theaters division experiencing a 25.9% drop in total revenue due to an unfavorable film mix and Hollywood strikes. However, the Hotels & Resorts division showed solid growth, boosted by events like the Republican National Convention. Despite these challenges, the company remains optimistic about the second half of the year, expecting a stronger film slate.
Furthermore, Marcus Corporation has completed refinancing transactions, repurchasing $86.4 million of convertible senior notes and securing $100 million in senior notes. The company has also announced a new theater location in St. Louis Park, Minnesota. These recent developments highlight Marcus Corporation's ongoing efforts to manage its capital structure and future growth.
InvestingPro Insights
The recent upgrade by Benchmark aligns with several key insights from InvestingPro. Marcus Corp's stock has shown strong momentum, with a 41.11% price total return over the past three months. This performance is reflected in an InvestingPro Tip noting that the stock is trading near its 52-week high, currently at 95.4% of that level.
Despite the positive outlook from Benchmark, InvestingPro Data indicates some financial challenges. The company's revenue for the last twelve months as of Q2 2024 stood at $646.73 million, with a revenue growth of -3.32% over the same period. This aligns with an InvestingPro Tip suggesting that net income is expected to drop this year.
It is worth noting that while Benchmark projects an EBITDA of $86 million for fiscal year 2024, the actual EBITDA for the last twelve months as of Q2 2024 was $74.83 million, showing a 10.1% decline. This data provides additional context to Benchmark's optimistic outlook and underscores the importance of monitoring the company's financial performance closely.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Marcus Corp, providing a deeper understanding of the company's financial health and market position.
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