Regal Entertainment Group Inc.RGC

Morningstar Rating

Stock Research and Analysis

by Warren Miller

Despite being the largest movie theater operator in the United States, we see no meaningful competitive advantages that give Regal Entertainment Group an economic moat. Tough negotiations with suppliers, intense competition, and an inability to control Read more

Bulls Say

Regal's large and well-located theater portfolio gives it an advantage over competitors when negotiating film licensing and concessions contracts.

Regal is already the biggest movie theater operator in the United States. This allows it to patiently walk away from theater circuit acquisitions that are overpriced or unattractive.

A downturn in consumer spending could actually help Regal because moviegoing is one of the cheapest forms of out-of-home entertainment. Read more

Bears Say

Regal's high level of fixed costs could force it to choose between keeping its dividend, investing in theaters, and making attractive acquisitions, if a year of poor movie quality hurts cash flow.

A material reduction in the theatrical release window by major studios could significantly reduce Regal's revenue.

Regal carries a large amount of debt on its balance sheet. If the theater industry fell on very hard times, servicing this debt could become more difficult. Read more

Strategy

Regal seeks acquisitions that will enhance its asset base at a fair price. The company's screen and theater count are in constant flux because of the acquisition and construction of new theaters while Read more

Management

Michael Campbell has been the CEO and chairman of Regal Entertainment Group since May 2005. He was previously the CEO of Regal Cinemas, a company he founded in 1989. Management's industry experience is solid, but we have a few qualms with the company's Read more

Profile

Regal is the largest movie theater circuit in the United States. It operates more than 6,300 screens in 39 states, including 44 of the top 50 designated market areas. Regal Read more

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