Theater advertiser National CineMedia, Inc. (NCMI, Nasdaq) has recently given us a sneak preview of its coming attractions. The company isn’t planning to officially unveil its fourth-quarter results until next month, but management pre-announced that sales for the year reached $380 million and cash flow topped out near $190 million. Those totals are both on par with last year, which is more than many companies can say at this point. They are also well above earlier expectations. More important, there is likely to be even more progress in the year ahead. In fact, the company is forecasting 2010 revenues to climb $20 - $30 million and surpass the $400 million level for the first time. That guidance will likely have Wall Street revising its more modest figures upward. The robust guidance doesn’t surprise us—part of our bullish outlook stemmed from the fact that advertisers would come out from hibernation this year and start reaching out to customers. ... More than 660 million people watched a movie in the National Cinemedia network last year. The company has picked up a wide range of new clients anxious to reach out to that crowd, including Taco Bell, State Farm, E*Trade and Outback Steakhouse. Going forward, we see rising cost per thousand (CPM) rates and stronger inventory utilization. That means incremental sales with hardly any additional spending—and thus, a nice bump to the bottom line. The upped guidance reinforces our positive opinion on NCMI, and the stock remains one of our top ideas.
Nathan Slaughter
