Regal Entertainment Q2 Estimates Cut At B. Riley Due To Weak Domestic Box Office

Ahead of theater chain Regal Entertainment Group's second-quarter earnings release, set for July 26, B. Riley analyst Eric Wold is lowering profit and revenue expectations as overall box office trends have continued to weaken. Wold is cutting his revenue estimate to $765 million from $801 million, while analysts tracked by FactSet expected revenue to hit $770 million. And Wold anticipates per-share earnings to come in at 19 cents, in line with FactSet consensus, and down from an earlier forecast of 29 cents. "Since we last made changes to our exhibitor models on June 5, domestic industry box office trends during the second quarter weakened further and ended with a decline of 3.5% vs. our expectation, at that time, for a low single-digit gain," he wrote in a note to investors. While the decline in box office should equate to an industry-wide per screen box office loss of about 4.5%, Wold said he assumes Regal outperformed the industry thanks, in part, to its cinema enhancements. Wold also believes that investors have overreacted to the weak blip in domestic box office and concerns surrounding premium video on demand. In the last three months Regal shares have declined nearly 12%. And it's not alone. Shares of Cinemark Holdings Inc. have dropped nearly 11%, AMC Entertainment Holdings Inc. shares are down more than 29% and IMAX Corp. shares are down more than 33%. "The movie industry's history is littered with periods of box office underperformance and outperformance and Q2 is no different," Wold wrote. "We see no reason to try to extrapolate larger issues around movie-going demand after just one quarter or to believe that Q2 is going to spur drastic release window changes for the industry." In the year to date Regal shares have fallen nearly 6%, while the S&P 500 index is up 9%.