Financial Trading Blog

Stock of the day 05/08/2016 – Cineworld Group PLC



Can Cineworld Group produce a blockbuster set of half year figures next Thursday?


Despite a rather lurch-filled year Cineworld has managed to edge back to the all-time highs it hit during 2015, grazing £6 both on the eve of the UK referendum results and, more recently, on the 1st August. The stock sits at a current trading price of £5.91 (IT-Finance.com, 05/08/2016).

Cineworld Group PLC Chart August 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 05/08/2016)

Thanks to the triple-boots of Spectre, Jurassic World and Star Wars: The Force Awakens Cineworld saw a 12.4% rise in full year sales to £705.8 million back in March, with pre-tax profit surging 48.1% to £99.7 million. This success continued into the company’s first quarter update for the 19 weeks to May 12th, the likes of Deadpool, Batman vs Superman, Captain America: Civil War, Zootopia and The Jungle Book helping total revenue rise by 9.8%.

However, while spring was strong for the box office, summer has been full of financial disappointments; X-Men: Apocalypse, Alice Through the Looking Glass, Ghostbusters, The Legend of Tarzan, Warcraft and Independence Day: Resurgence have to varying degrees all underperformed expectations, something that is likely to impact the second quarter of Cineworld’s interim report.

Looking ahead there are still some of the year’s biggest films to come; Suicide Squad should open strong (even if it proves to match Batman vs Superman’s lack of longevity), while Fantastic Beasts and Where to Find Them is almost guaranteed to break a billion worldwide. Then there is Disney’s trio of upcoming releases; Marvel’s Doctor Strange and Star Wars: Rogue One may not be able to match the other films in their respective series, but should nevertheless bring in decent returns, while Moana could be the latest success in Disney’s non-Pixar animation renaissance.

Cineworld Group PLC has a consensus rating of ‘Buy’ with an average target price of £65.12.


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