Can AMC's Refinancing Efforts Help Achieve Its 3x Leverage Goal?

AMC Entertainment Holdings, Inc. AMC has made progress in reducing financial leverage through debt refinancing, repayments and equity-related actions. The company aims to bring leverage down to around 3x over time. Lower debt and borrowing costs could help improve financial flexibility as AMC works toward this goal.

During the second quarter, AMC refinanced $400 million of debt due in 2027, extending the maturity by four years. The company also converted approximately $155.8 million of exchangeable debt due in 2030 into equity. In addition, AMC completed a $150 million at-the-market equity offering, raising more than $85 million, followed by a $200 million registered direct equity offering. The company then moved to redeem $125.5 million of senior subordinated notes due in 2027.

These actions are expected to reduce AMC’s annual cash interest expense by approximately $16 million. The company also does not anticipate any material debt principal payments before 2029. Further savings could come from lower interest rates on approximately 75% of the debt as leverage improves, potentially reducing annual interest expense by another $51 million.

AMC ended the second quarter with $778 million of cash, excluding restricted cash, while debt has declined $1.7 billion since the end of 2020. The stronger balance sheet and lower borrowing costs should help reduce financial pressure. However, AMC still needs to make further progress from leverage below 6.5x to reach its 3x target.

AMC’s Price Performance, Valuation & Estimates

Shares of AMC have surged 100% in the past six months compared with the industry’s 5% growth. In the same time frame, AMC has outperformed industry players like Cinemark Holdings, Inc. CNK and The Marcus Corporation MCS.

AMC’s Price Performance

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From a valuation standpoint, AMC trades at a forward price-to-sales (P/S) multiple of 0.39, below the industry’s average of 2.9. Cinemark and Marcus have P/S ratios of 1.2 and 1.11, respectively.

AMC’s P/S Ratio (Forward 12-Month) vs. Industry

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The Zacks Consensus Estimate for AMC’s 2026 loss per share indicates a 77.1% year-over-year improvement. Conversely, industry players like Cinemark and Marcus are likely to witness growth of 126.9% and 652.9%, respectively, year over year in 2026 earnings.

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AMC’s Zacks Rank

AMC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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