IMAX (Nasdaq: IMAX ) movies are larger than life, but the company's financial results hardly impress anybody. But the third-quarter report on Wednesday night could change all of that. This could be the bottom of this stock's deep and painful bounce.
What Fools say:
Here's how IMAX's CAPS rating stacks up against some of its peers and competitors:
| Company |
Market Cap (millions)
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Regal Entertainment Group (NYSE: RGC )
|
$1,831
|
30.4
|
**
|
|
Cinemark Holdings (NYSE: CNK )
|
$913
|
N/A
|
**
|
|
Marcus (NYSE: MCS )
|
$437
|
19.9
|
**
|
|
National CineMedia (Nasdaq: NCMI )
|
$407
|
16.0
|
***
|
|
IMAX
|
$134
|
N/A
|
****
|
Data taken from Motley Fool CAPS on Nov. 4, 2008.
"Despite a growing demand for more 'high tech' entertainment, this company's management has proven time and time again that they can't shoot straight," says CAPS all-star JohnP5435 in defense of his thumbs-down rating on IMAX. "Great product, but poor delivery and management."
But fellow star player 1stock1 disagrees vehemently. "This is an ideal recession industry, as people trade down from more expensive forms of entertainment to the (relatively) cheap going to the movies," the argument goes. "They are continuing to add theaters and growing at a healthy pace."
What management does:
These tables are not for the squeamish. Sales are shrinking rather than growing, and the red ink flows across the income statement by the barrel. Nearly every indicator here is moving in the wrong direction.
|
Margins
|
3/2007
|
6/2007
|
9/2007
|
12/2007
|
3/2008
|
6/2008
|
|
Gross
|
40.3%
|
41.4%
|
39.6%
|
31.3%
|
31.1%
|
26.5%
|
|
Operating
|
3.0%
|
(1.3%)
|
(4.8%)
|
(17.2%)
|
(22.6%)
|
(31.4%)
|
|
Net
|
(14.2%)
|
(20.9%)
|
(22.8%)
|
(24.8%)
|
(30.8%)
|
(40.2%)
|
|
FCF/Revenue
|
(1.2%)
|
(7.6%)
|
(4.2%)
|
(7.7%)
|
(7.1%)
|
(12.0%)
|
|
Growth (YOY)
|
3/2007
|
6/2007
|
9/2007
|
12/2007
|
3/2008
|
6/2008
|
|
Revenue
|
5.0%
|
(8.2%)
|
(6.4%)
|
(11.0%)
|
(16.0%)
|
(13.3%)
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
The company's hopes this quarter ride on Batman's broad shoulders. The Dark Knight pulled in $55 million in box office receipts for IMAX in seven weeks, on its way to a billion-dollar global performance. Warner (NYSE: TWX ) shot a few scenes for that movie with IMAX cameras, a first for a mainstream motion picture. Let's put a smile on that face!
To put that number into perspective, consider that Kung Fu Panda was the saving grace for IMAX in the last quarter, and its opening weekend sales stopped at $2.3 million. Batman tripled that figure, with a $7 million opening weekend.
Between the prospect of showing more hit movies like these, and cheaper distribution in the new digital IMAX format, this could be the turning point in the IMAX story. Next year's Transformers sequel will follow in Batman's huge footsteps with exclusive large-format action scenes, and with the digital projection network expected to grow from just three locations last quarter to about 50 by the end of the year, the digital revolution appears to be on track.
Thank goodness. IMAX could use some good news right about now.
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