Dropping from £5.20 to £2.30 in early February following a fully-underwritten rights issue to fund its takeover of Regal Entertainment, the cinema chain spent most of the next few months on the rise, hitting a high of £3.27 at the start of October.
However, those gains began to unravel in the final quarter of 2018, the stock closing the year at £2.65. 2019 has seen it bounce back a bit, with Cineworld Group (LON:CINE) now at a current trading price of £2.81.
The firm’s last update came in mid-November. Covering the period from 1st January to 11th November, total group revenue rose 11.6%, with a 13.2% increase in the US, a 7.1% jump in the UK & Ireland, and a 6.6% climb in the Rest of the World.
Superhero films helped drive revenue higher, with Avengers: Infinity War and Black Panther in the first half of the year, and Ant-Man and the Wasp and Venom in the second. In Europe there was also a boost thanks to Mamma Mia! Here We Go Again and Bohemian Rhapsody.
Despite the double digit growth, investors were disappointed that Cineworld kept its forecasts unchanged, sending the stock 6% lower as the company said its performance was ‘in line’ with current expectations.
There is no reason why Wednesday won’t see another strong performance. Since the last update there have been plenty of big releases, including Fantastic Beasts: The Crimes of Grindelward, Ralph Breaks the Internet, Spider-man: Into the Spiderverse, Aquaman, Bumblebee and Mary Poppins Returns. Yet even if it does manage another 10%-plus rise in revenue, that’ll mean little if it doesn’t also up its full year guidance.
Cineworld Group(LON:CINE) has a consensus rating of ‘Buy’ alongside an average target price of £5.61.
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