The Marcus Corporation (MCS) recently enhanced shareholders' value based on its strong cash flow position and in anticipation of a dividend tax rate increase in 2013. The board of directors has approved a special dividend of $1.00 per share. Additionally, it has brought forward the date of payment for the next two regular quarterly dividends totaling 17 cents per share.
Management has rescheduled the dividend payments from February and May, 2013 to December 28, 2012. The dividend is payable to shareholders of record on December 17. The company also plans to return to its regular dividend payment schedule from August 2013.
Besides its regular dividend payouts, the company has a share repurchase program in place. At the end of first quarter of fiscal 2013, the company had cash and cash equivalents of $14.3 million versus $12.4 million in 2012. Shareholder’s equity was $352.3 million compared with $343.8 million in 2012.
Marcus is not the only company attempting to avoid the potential changes in the tax law for 2013. In the last one month, many companies have taken up the same strategy by announcing special dividends. Among hoteliers and casino operators, Wynn Resorts Limited (WYNN) rewarded its shareholders with a hefty special dividend of $7.50 per share in third quarter 2012.
Las Vegas Sands Corp. (LVS) also approved a special dividend of $2.75 per share on top of its regular quarterly dividend of 25 cents. We believe additional dividend along with the acceleration of regular dividend payments affirm Marcus’ positive outlook and reflects its confidence in its fundamentals.
Marcus currently carries a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We also have a long-term ‘Outperform’ recommendation on the stock. Over the last 7 days, one analyst moved the estimate upward for the upcoming quarter from 13 cents to 15 cents per share. We believe that the company’s decision to distribute more profits with shareholders encouraged the analyst to pull its estimate upward, which in turn enhanced its Zacks Rank.
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