At least three analysts have already reduced their earnings forecasts for the top publicly traded exhibition chains after Q2 ended with industrywide box office sales -2.9% compared with the same period last year. “We had originally built in flat- to modestly-higher trends in overall second quarter Box Office results,” Barrington Research’s James Goss says this morning. As a result, he cut his earnings-per-share projection for Regal by 40% to 15 cents, with Cinemark -30% to 33 cents, and Carmike -27% to 33 cents. He says the current quarter might also fall short of last year, which included Paramount’s Transformers: Dark Of The Moon, Warner Bros’ Harry Potter And The Deathly Hallows Part 2, Paramount’s Captain America: The First Avenger, and Sony’s The Smurfs. But he’s impressed with the opening performance for Sony’s The Amazing Spider-Man and Universal’s Ted, and seems optimistic about Warner Bros’ The Dark Knight Rises, Sony’s Total Recall, and Universal’s Bourne Legacy. That could result in “an upside surprise” in Q3 leading into a strong Q4, he says. With Q1’s 20.7% improvement over last year, domestic box office sales for the first six months are +7.3% over the first half of 2011 — and he expects the full year’s results to be up as well.
Barclays’ Anthony DiClemente also tweaked his numbers this morning, taking his estimate for Regal’s Q2 EPS down 16% to 16 cents, and Cinemark -8% to 34 cents. He remains bullish about the industry, though. “Bigger picture, we believe the exhibitors should be favored in times of macro uncertainty given that they operate in an acyclical industry and given that moviegoing remains one of the cheapest forms of out-of-home entertainment,” he says.
These reports follow one last week from Wedbush Securities’ Michael Pachter, who was disappointed after projecting a 1.9% pickup in box office sales in Q2. He took his Q2 EPS estimate for Regal down 35% to 20 cents, Cinemark -7% to 43 cents, and Carmike -10% to 26 cents. In addition to the lower-than-expected Q2 sales, he expects theater chains’ film rental costs to be higher than expected “due to a higher concentration of total box office within the top ten movies” — and especially Marvel’s The Avengers.