Marcus (MCS) versus Reading International (RDI) Critical Review

Marcus (NYSE: MCS) and Reading International (NASDAQ:RDI) are both small-cap consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.

Risk & Volatility

Marcus has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500. Comparatively, Reading International has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.



Earnings & Valuation

This table compares Marcus and Reading International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Marcus $622.71 million 1.38 $64.99 million $1.54 20.00
Reading International $279.73 million 1.36 $30.99 million $1.30 12.61

Marcus has higher revenue and earnings than Reading International. Reading International is trading at a lower price-to-earnings ratio than Marcus, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Marcus and Reading International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marcus 10.44% 10.48% 4.48%
Reading International 11.08% 8.22% 3.40%

Insider and Institutional Ownership

60.4% of Marcus shares are owned by institutional investors. Comparatively, 36.0% of Reading International shares are owned by institutional investors. 33.5% of Marcus shares are owned by insiders. Comparatively, 25.6% of Reading International shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Marcus and Reading International, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marcus 0 0 3 0 3.00
Reading International 0 0 2 0 3.00

Marcus presently has a consensus target price of $35.33, indicating a potential upside of 14.72%. Reading International has a consensus target price of $23.50, indicating a potential upside of 43.38%. Given Reading International’s higher possible upside, analysts clearly believe Reading International is more favorable than Marcus.

Dividends

Marcus pays an annual dividend of $0.60 per share and has a dividend yield of 1.9%. Reading International does not pay a dividend. Marcus pays out 39.0% of its earnings in the form of a dividend. Marcus has increased its dividend for 6 consecutive years.

Summary

Marcus beats Reading International on 12 of the 16 factors compared between the two stocks.

About Marcus

The Marcus Corporation, together with its subsidiaries, owns and operates movie theatres, and hotels and resorts. As of December 28, 2017, the company operated approximately 69 movie theatres with 895 screens in Wisconsin, Illinois, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and Ohio; owned or managed approximately 4,841 hotel and resort rooms; and 19 hotels, resorts, and other properties for third parties in nine states. It also operates a family entertainment center under the Funset Boulevard name in Appleton, Wisconsin, as well as owns and operates a retail outlet under the name of Ronnie's Plaza. In addition, the company provides hospitality management services, including check-in, housekeeping, and maintenance for a vacation ownership development, such as 68 two-room timeshare units and a timeshare sales center. The Marcus Corporation was founded in 1935 and is headquartered in Milwaukee, Wisconsin.

About Reading International

Reading International, Inc. engages in the ownership, development, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. The company operates in two segments, Theatrical Motion Picture Exhibition (Cinema Exhibition) and Real Estate. The Cinema Exhibition segment operates multiplex cinemas. This segment operates its cinema exhibition businesses under the Reading Cinemas, Angelika Film Centers, Consolidated Theatres, City Cinemas, and Rialto brands. The Real Estate segment owns, develops, rents, or licenses retail, commercial, and live theater assets. As of December 31, 2017, the company had interests in 58 cinemas comprising approximately 473 screens; fee interests in 3 live theaters; fee interest in 1 cinema in New York City; fee interests in 2 cinemas in Australia and 4 cinemas in New Zealand; fee interest in Union Square property; entertainment-themed centers; interest in 70.4 acres of vacant land; interest in 202 acres of vacant land; fee interest in 2 office buildings; and fee ownership of approximately 20.7 million square feet of developed and undeveloped real estate assets. Reading International, Inc. was founded in 1937 and is headquartered in Culver City, California.

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