A Media Company for Income Investors

For those investors who like stable, high yielding stocks, here is a media services stock that looks good for 2014.

Jan 24, 2014 at 10:34AM

Regal Entertainment Group (NYSE:RGC) operates motion picture theaters in the United States including Regal Cinemas, United Artists theaters, and Edwards cinemas. It owns and operates 576 theatres, which includes over 7,330 screens. This company, with strong earnings history and a high dividend yield, might be a good way to continue riding on the success of movie production companies such as Walt Disney (NYSE:DIS) which has made over $300 million already just from the theater screenings of the film Frozen.


Generating Income 
With a 4.90% yield, Regal Entertainment is the kind of dividend paying stock that income investors like to see, one with stable earnings history, and still with potential for more growth. The stock price itself has done well recently, beating the S&P 500 with an increase of 37% in 2013 and 60% over the last two years in an almost steady climb. With a P/E ratio of 17.35, it is also still fairly priced within the industry.Compare this with competitor Cinemark (NYSE:CNK) which has a P/E of nearly 23.

Even with these advances over the last few years, the price still has growth potential. Regal's earnings have grown over 200% in the last year. For the most recent quarter reported, revenue for Regal was higher than the industry average, and has increased 17.3% over the same period last year. 

One important point of consideration for investors looking to buy now, even though the stock price has already appreciated so much recently, is that the company's cash flow has also increased by over 86% in the last year. With these increased cash flows, the company should have the liquidity and stability to grow operations and still continue to reward shareholders with high dividends.

What could hold this company back?
There is one area of concern, the company's lackluster profit margins. With a gross margin of less than 23%, this company is below the industry average in this metric. While the company has strong and growing earnings, the ability to retain those earnings as profit will determine how successfully the company can continue to reward shareholders. However, gross margin have risen since the same period last year, a good sign that the company is proactive in strengthening their operations.

Other analysts have also seen these less than optimal margins and some have downgraded Regal as a result. Multiple firms, including Zacks and others, have downgraded the stock from buy to hold over the last few months, with a price target near $21-$22.

Foolish takeaway
High yield, strong and growing earnings, and a track record of showing the willingness and ability to proactively work on areas that need attention all make Regal an attractive stock for income investors. The company will be reporting their 2013 earnings soon, so keep watching for growing revenues and increased profit margins. The company's downgrades may be good for investors who want to get in while others are looking away. 

More high dividend stocks
Regal's dividend yield makes it attractive for income investors, but it's not the only company with a great yield. Check out The Motley Fool's special free report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Fool contributor Bradley Seth McNew has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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