$0.99
$2.86
bear $0.99
base $1.75
bull $2.86
margin of safety $0.95
market price* $2.06
National CineMedia sells the advertising you see before a movie starts. The main product is the Noovie pre-show, and the company also sells lobby screens and digital ads tied to theaters. Its network covers 17,621 screens in 1,371 theaters. That includes all of AMC and Cinemark, plus other chains under multi-year network affiliate agreements. Regal left its exclusive agreement in July 2023 and now participates as an affiliate. The company earns money by selling ad time to brands and paying the theaters a fee for access. Those fees are a fixed amount per patron and a per-screen fee that rises 5% a year. The company has said that beverage advertising sold to AMC and Cinemark for their soft-drink suppliers was about 5.8% of revenue in 2025, and that it expects lower beverage revenue in 2026. Which years we used. NCM's business changed in 2023. It went through Chapter 11, and it reconsolidated its operating subsidiary in mid-2023. Earlier years describe a different structure, with founding-theater-owner payments and a different share count. We built earnings on a cash-flow basis. Working-capital swings are stripped out, and stock compensation is treated as a real cost. Only capital spending needed to keep the network running is deducted. On that basis we get roughly $0.23 per share for 2024 and $0.19 per share for 2025. We exclude 2023 (about negative $0.53 per share) because reorganization costs and roughly $12.5 million of interest distort it. We used the midpoint of 2024 and 2025, about $0.21 per share, or roughly $20 million a year, as the starting level. The 2025 dip. Operating cash flow fell from $60.3 million to $8.4 million in 2025. Almost all of that was timing. Advertiser prepayments (deferred revenue) swung from a $13.2 million inflow to a $14.6 million outflow, and receivables collections also reversed. After removing working capital, cash earnings were about $38 million in 2024 and $32 million in 2025. The rest of that decline comes mostly from the first cash payment under the tax receivable agreement with Cinemark and from higher exhibitor fees. Owner earnings fell about 19% in 2025, and we assume no growth in year one. In the first half of 2026, revenue rose 6.7% to $92.4 million, and the second quarter rose about 13%. Operating cash flow was $16.6 million against $1.1 million a year earlier. Because those results are more recent than the decline and point the other way, we do not extrapolate a further fall. We also do not credit growth from them. Base case, about $1.75 per share. Our base case holds owner earnings flat at about $0.21 per share for ten years. The theater agreements give NCM exclusive access to sell cinema advertising in its theaters, with about 15.6 years of weighted-average remaining term. In April 2025, AMC extended its agreement by five years. We then fade earnings to zero by the end of that term, because we cannot name a renewal that has not yet happened. We give no credit for higher attendance, price increases, new products or margin expansion. None of those is contracted or a proven repeatable process. Bear case, about $0.99 per share. Cinema attendance and advertiser demand are the main risks. The company's own filings show that beverage revenue from the AMC and Cinemark beverage agreements is dropping in 2026, and the per-screen fee steps up 5% every year. We assume roughly $7 million of that beverage revenue disappears. This is our estimate, not a disclosed figure. Fee escalators then outrun revenue, so owner earnings shrink about 5% a year until the agreements end. Debt is small: interest paid was $0.2 million in 2025, so leverage is not the driver of the bear case. Bull case, about $2.86 per share. Post-showtime ad inventory has been added under the 2025 AMC agreement and earlier under Regal, and it is a higher-value product. In the first half of 2026 revenue grew and operating cash flow improved. The company also acquired Spotlight in November 2025. If those levers keep working, owner earnings grow about 3% a year for ten years. The theater agreements are then extended again, as AMC's was in 2025, so the earnings run for another decade, roughly twenty years in total. Accounting notes. About $33 million a year of amortization on the theater-agreement intangible is a non-cash charge, so it is added back automatically. Because that asset is wasting, we fade the cash flows at the end of the agreements instead of assuming they continue forever. The 2025 AMC agreement extended the useful life of that intangible and cut amortization from $37.8 million to $33.3 million, with no cash effect. Cinemark and AMC are the two largest theater partners, so any change in their attendance or in their agreements affects value directly. What would make this wrong. Owner earnings could be much higher if attendance and ad pricing keep rising, and much lower if attendance falls or the theater fees outpace revenue.