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Saturday August 13, 2022



AMC Posts Earnings

AMC Entertainment Holdings, Inc. (AMC) released its latest earnings report on Monday, August 9. With the widespread reopening of movie theaters, AMC's revenue recovered in the third quarter.

The company reported revenue of $444.7 million during the quarter. This was up from $18.9 million in revenue during the same quarter last year.

"The second quarter of 2021 was transformational for AMC. We raised yet another $1.25 billion of new equity capital (before commissions and fees) in the quarter, boosting our quarter ending liquidity to more than $2 billion (including cash and undrawn revolving lines of credit) which is about double the previous highest ever such mark in AMC's 101-year history," said AMC Chairman and CEO Adam Aron. "We believe this gives AMC financial staying power to navigate boldly amidst coronavirus waters. And by June 30, substantially all of our theatres were open again to entertain and delight our guests."

AMC reported a quarterly net loss of $343.6 million. This was an improvement from a net loss of $561.2 million last year at this time.

AMC was caught up in the "meme stock" trend during the past year, as retail investors purchased shares of companies targeted by short-sellers. GameStop and AMC were among the most notable stocks to be "short squeezed." AMC stock was valued at less than $2 per share in early January before rising to more than $20 per share near the end of the same month. The company's stock has fluctuated wildly throughout the year, reaching a pinnacle of $72.62 on June 2.

AMC Entertainment Holdings, Inc. (AMC) shares ended the week at $33.47, up 2.4% for the week.

Disney Releases Earnings Report

The Walt Disney Company (DIS) reported its quarterly earnings on Thursday, August 12. The company's revenue and net income has increased year over year.

Revenue for the quarter came in at $17.02 billion. This was up from $11.78 billion in revenue last year at this time.

"We ended the third quarter in a strong position, and are pleased with the Company's trajectory as we grow our businesses amidst the ongoing challenges of the pandemic," said Disney CEO Bob Chapek. "We continue to introduce exciting new experiences at our parks and resorts worldwide, along with new guest-centric services, and our direct-to-consumer business is performing very well, with a total of nearly 174 million subscriptions across Disney+, ESPN+ and Hulu at the end of the quarter, and a host of new content coming to the platforms."

Disney posted net income of $918 million for the quarter. Last year at this time, the company reported a net loss of $4.72 billion for the quarter.

The company's Parks, Experiences and Products segment posted a jump in revenue as its theme parks around the world have reopened. Domestic revenue hit $2.66 billion during the quarter, up from a mere $213 million during the same quarter last year. This increase was due, in large part, to the fact that Walt Disney World Resort in Florida was open for the entire quarter after being closed for the entire quarter at this time last year. International revenue experienced a more modest increase from $116 million to $526 million. Shanghai Disney Resort was open for the entire quarter after being open for only 48 days in the same quarter last year. Hong Kong Disneyland was open for 72 days during the quarter as opposed to 10 days last year at this time.

The Walt Disney Company (DIS) shares ended the week at $181.08, up 2.3% for the week.

Wendy's Reports Earnings

The Wendy's Company (WEN) reported its quarterly earnings on Wednesday, August 11. The fast-food company's earnings exceeded analysts' expectations.

Wendy's reported net sales of $493.3 million, up 23% from $402.3 million reported in the same quarter last year. Reported net sales topped analysts' expectations of $462.6 million for the quarter.

"We are thrilled to once again increase our 2021 financial outlook across all key financial metrics, driven by a transformative quarter that showcased our continued momentum and the overall strength of our business," said Wendy's President and CEO Todd Penegor. "Our robust growth continued in the second quarter, as sales significantly exceeded our expectations, leading to restaurant level margins of more than 20% and record profits, fueling our restaurant economic model."

The company reported net income of $65.7 million for the quarter or $0.29 per share. This is up from $24.9 million or $0.11 per share during the same quarter last year.

Wendy's, founded in 1969 by Dave Thomas in Ohio, operates more than 6,800 restaurants around the globe. The company had 43 restaurant openings over the quarter. Wendy's has partnered with start-up company REEF with the goal of opening 50 "ghost kitchens" in 2021. These kitchens help address the demand for dining away from the restaurant and fulfill delivery orders placed through third parties like DoorDash. In 2020, Wendy's successfully tested eight ghost kitchens in Canada and plans to open and operate 700 by the year 2025.

The Wendy's Company (WEN) shares closed at $23.70, up 6.2% for the week.

The Dow started the week at 35,230 and closed at 35,515 on 8/13. The S&P 500 started the week at 4,438 and closed at 4,468. The NASDAQ started the week at 14,856 and closed at 14,823.

Treasury Yields Decrease as Consumer Confidence Falls

Yields on U.S. Treasury bonds fell late in the week after an early rise. Bond yields increased in anticipation of the release of the consumer confidence reports and consumer price index, but took a downward turn following their release.

On Friday, the University of Michigan released its latest Survey of Consumers. The preliminary August report showed a Consumer Sentiment Index of 70.2, a sharp drop from July's index of 81.2.

"Consumers reported a stunning loss of confidence in the first half of August," said Richard Curtin, Chief Economist at the University of Michigan's Surveys of Consumers. "The Consumer Sentiment Index fell by 13.5% from July, to a level that was just below the April 2020 low of 71.8."

The benchmark 10-year Treasury note yield rose to a high of 1.380% on Thursday but fell to 1.285% during trading on Friday. The yield on the 30-year Treasury bond dropped to 1.929% during trading on Friday after reaching a peak of 2.034% on Thursday.

On Wednesday, the Labor Department released its Consumer Price Index Summary for July. Overall, prices increased 0.5% over the past month. Year-over-year, the index increased 5.4%.

"There is normally a direct relationship between bond yields and inflation expectations," said Xian Chan, Chief Investment Officer at HSBC Wealth Management. "If inflation is expected to be higher, then bond yields go up to reflect the likelihood of higher interest rates. But interestingly, bond yields have come down after peaking in April."

The 10-year Treasury note yield closed at 1.29% on 8/13, while the 30-year Treasury bond yield was 1.93%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, August 13. After several weeks of decreases, the rates moved upward.

This week, the 30-year fixed rate mortgage averaged 2.87%, up from last week's average of 2.77%. Last year at this time, the 30-year fixed rate mortgage averaged 2.96%.

The 15-year fixed rate mortgage averaged 2.15% this week, up from 2.10% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.46%.

"Following last Friday's strong jobs report, which revealed broad based gains in employment and wage growth, mortgage rates are moving higher," said Freddie Mac's Chief Economist Sam Khater. "After dropping for six consecutive weeks, the 30-year fixed-rate mortgage increased by ten basis points week over week."

Based on published national averages, the savings rate was 0.06% as of 7/19. The one-year CD averaged 0.14%.

Published August 13, 2021
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