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Monday August 15, 2022



AMC Posts Earnings

AMC Entertainment Holdings, Inc. (AMC) released its third quarter earnings report on Monday, November 8. Despite exceeding analysts' expectations, the company's stock fell nearly 11% following the earnings release.

The company reported revenue of $763.2 million during the quarter. This was up from $119.5 million in revenue during the same quarter last year, and exceeded analysts' estimates of $708 million.

"For the first time since the fourth quarter of 2019, substantially all of our worldwide theatres were open for the entirety of a calendar quarter," said AMC CEO Adam Aron. "Thanks to an increasingly appealing film slate, rising COVID-19 vaccination counts, our commitment to robust health and safety protocols and our own greatly increased marketing activity, AMC's theatres in the U.S., Europe and the Middle East safely welcomed back 40 million guests during the third quarter of 2021."

AMC reported a quarterly net loss of $224.2 million, an improvement from a net loss of $905.8 million last year at this time. Net loss was $0.44 on an adjusted per share basis, an improvement compared to a loss of $8.41 per share in the prior year's quarter and analysts' estimates of a loss of $0.53 per share.

The Leawood, Kansas-based movie theater operator reported almost 40 million attendees at its domestic and international theatres for the quarter, compared to 6.5 million attendees in the prior year's third quarter. Almost all the company's locations were open for the duration of the quarter. Food and beverage revenue came in at $265.2 million, up from $29.1 million last year. The company's stock has been especially volatile this year after getting caught up in the "meme stock" trend, fluctuating between a low of $1.91 in January to a high of $72.62 in June.

AMC Entertainment Holdings, Inc. (AMC) shares ended the week at $40.00, down 5% for the week.

Disney Releases Earnings Report

The Walt Disney Company (DIS) reported its quarterly and full-year earnings on Wednesday, November 10. The company reported an increase in revenue and income for the quarter.

Revenue for the quarter came in at $18.53 billion, up 26% from $14.71 billion at the same time last year, but missing analysts' estimates of $18.79 billion. For the full year, the company reported revenue of $67.42 billion, up 3% from $65.39 billion last year.

"This has been a very productive year for The Walt Disney Company, as we've made great strides in reopening our businesses while taking meaningful and innovative steps in Direct-to-Consumer and at our parks, particularly with our popular new Disney Genie and Magic Key offerings," said Disney CEO Bob Chapek. "As we celebrate the two-year anniversary of Disney+, we're extremely pleased with the success of our streaming business, with 179 million total subscriptions across our DTC portfolio at the end of fiscal 2021 and 60% subscriber growth year-over-year for Disney+."

Disney posted net income for the quarter of $159 billion, up from a net loss of $710 million at this time last year. For the full year, the company reported net income of $2.00 billion, up from a net loss of $2.86 billion in the prior year.

The company's Parks, Experiences and Products segment reported quarterly revenue increased 99% to $5.45 billion. This segment includes the company's theme parks, resorts, cruise ships and vacation clubs. This growth was attributed to all of the company's parks and resorts being open for the full quarter, whereas in the prior year, a number of its international resorts had been closed for all of part of the quarter. The company reported that it spent approximately $1 billion in fiscal 2021 to address government regulations and implement safety measures for its employees and guests. Despite reporting an increase in revenue and income, the company saw its stock fall 7% after the earnings release, which analysts attributed to the slowing growth of subscribers to Disney's streaming services.

The Walt Disney Company (DIS) shares ended the week at $159.00, down 10.7% for the week.

Wendy's Reports Earnings

The Wendy's Company (WEN) reported its third quarter earnings on Wednesday, November 10. The fast-food company's stock fell 7% after the earnings release revealed that same-store sales growth fell short of expectations.

Wendy's reported net sales of $470.3 million, up 4.0% from $452.2 million reported in the same quarter last year. Reported net sales fell just short of analysts' expectations of $470.5 million for the quarter.

"We are extremely proud of the progress we are making against our three strategic growth pillars," said Wendy's President and CEO Todd Penegor. "We continued to grow our breakfast business, digital sales accelerated, and we meaningfully expanded our global footprint in the third quarter."

The company reported net income of $41.2 million for the quarter or $0.18 per share. This is up from $39.8 million or $0.17 per share during the same quarter last year.

The Dublin, Ohio-based fast food company opened a total of 48 new restaurants during the quarter, up from 33 new stores at the same time last year. Global same-restaurant sales growth slowed to 3.3%, down from 6.1% in the prior year's quarter and falling short of analysts' estimates of 4.9% growth. Although same-restaurant sales growth slowed to 2.1% in the U.S., international sales growth rose to 14.7%. The company announced an $80 million increase to its share repurchase authorization and anticipates launching a $125 million accelerated share repurchase program in the fourth quarter.

The Wendy's Company (WEN) shares closed at $21.74, down 4.4% for the week.

The Dow started the week at 36,416 and closed at 36,100 on 11/12. The S&P 500 started the week at 4,701 and closed at 4,683. The NASDAQ started the week at 15,996 and closed at 15,861.

Treasury Yields Decrease as Consumer Confidence Falls

U.S. Treasury yields spiked on Wednesday after consumer price data revealed greater-than-expected inflation. Yields remained relatively flat on Friday after consumer sentiment data fell to a ten-year low.

On Wednesday, the Labor Department reported the consumer price index (CPI) rose 6.2% from a year ago, reaching its highest level since the early 1990s. Core CPI, which excludes food and energy prices, was up 4.6% year-over-year.

"Inflation is not only showing no signs of abating – it is accelerating," said Federated Hermes portfolio manager and equity strategist Steve Chiavarone. "The acceleration this month was broad-based, undercutting the argument that it is simply being driven by one or two anomalous categories."

The benchmark 10-year Treasury note yield opened the week of 11/8 at 1.453%, hit a low of 1.418% on Tuesday and was trading as high as 1.586% on Friday. The 30-year Treasury bond yield opened the week at 1.888%, hit a low of 1.796% on Tuesday and was trading as high as 1.968% on Friday.

On Friday, the University of Michigan released its preliminary results for the November 2021 Surveys of Consumers. This consumer sentiment index measures consumer confidence or optimism for the U.S. economy. The index fell to 66.8 in November, down from a final October reading of 71.7 and the lowest figure since 2011.

"Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation," said Richard Curtain, chief economist for the Surveys of Consumers. "Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century."

The 10-year Treasury note yield closed at 1.57% on 11/12, while the 30-year Treasury bond yield was 1.93%.

Mortgage Rates Fall Below 3%

Freddie Mac released its latest Primary Mortgage Market Survey on Wednesday, November 10. Rates fell for a second consecutive week after several weeks of increases.

This week, the 30-year fixed rate mortgage averaged 2.98%, down from last week's average of 3.09%. Last year at this time, the 30-year fixed rate mortgage averaged 2.84%.

The 15-year fixed rate mortgage averaged 2.27% this week, down from 2.35% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.34%.

"Despite the re-acceleration of economic growth, the recent bond rally drove mortgage rates down for the second consecutive week," said Freddie Mac's Chief Economist Sam Khater. "These low mortgage rates, combined with the tailwind of first-time homebuyers entering the market, means that purchase demand will remain strong into next year. However, affordability pressures continue to be an ongoing concern for homebuyers."

Based on published national averages, the savings rate was 0.06% as of 10/18. The one-year CD averaged 0.14%.

Published November 12, 2021

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