You wouldn't know it by the stock price, but IMAX (NYSE:IMAX) is on track for its best year ever. The big-screen specialist reported better-than-expected results in both the first and second quarters.

The premium large-format exhibitor has been capitalizing on a strong slate of movies in 2019, and the company changed the way it scheduled films, producing record-setting results in China. Unfortunately, fears that viewers are abandoning theaters for streaming and overall pessimism regarding the industry have weighed on the consumer discretionary stock, which hasn't kept pace with the broader market this year.

IMAX will have another opportunity for a blockbuster performance when the company releases its third-quarter financial results before the market opens on Oct. 31. Let's recap the second quarter and some overall industry trends to see if it provides any insight into whether investors will be spooked when IMAX reports earnings on Halloween.

"The Avengers" logo superimposed over the word IMAX.

Image source: IMAX.

Top-line and box-office growth

During the second quarter, IMAX reported revenue of $105 million, up 6.6% year over year, driven higher by growth in global box office and record attendance in China -- which climbed 29% compared to the prior-year quarter. 

IMAX doesn't provide quarterly guidance, but for the full year, management expects global ticket sales to increase by a low-double-digit percent above its 2018 results of $1.03 billion. Analysts' consensus estimates declined during the quarter and are now calling for revenue of $86.88 million, which would represent growth of about 6% year over year. 

Cost-cutting should increase profits

In the wake of an industrywide box-office slump in 2017, IMAX announced a number of steps it would take to improve profitability. The company implemented a reorganization designed to reduce costs by about $20 million annually. IMAX also shortened the runs of most films at its theaters, increased its reliance on 2D movies, and worked with its partners to install premium seating in many of its theaters.

IMAX is continuing to focus on cost controls, which is still paying dividends. The company is expecting its operating expenses to be essentially flat compared to last year -- even as it increases revenue -- pushing a greater percentage of profits to the bottom line.

Analysts are expecting earnings per share of $0.20, 2 1/2 times the $0.08 IMAX reported in the prior-year quarter. 

A rebounding box office

With a weak slate of movies to start out the year, ticket sales stumbled out of the gate in 2019 but have been coming on strong ever since. Blockbusters -- including Avengers: Endgame, The Lion King, Toy Story 4, and more recently, the surprising staying power of Joker -- have helped close the gap, though it's doubtful that this year's ticket sales will be able to compete with the record set in 2018. 

IMAX has been doing much better than its movie-theater peers. For the first half of the year, while the overall domestic box-office take was down by nearly 10%, IMAX revenue increased by 1% year over year, while operating profit climbed 20% and earnings per share jumped 28%. 

Final thoughts

Given the industry-beating performance of IMAX so far this year, it's clear investors are underestimating the ability of the company to get consumers off their couches and pay a premium to see their favorite blockbuster.

The company has repeatedly shown it can outperform. There isn't any reason to believe that won't continue in Q3.