Entertainment technology veteran IMAX (IMAX -0.24%) reported fourth-quarter results on Wednesday. The company smashed Wall Street's estimates across the board, bracing for a large business impact from the coronavirus outbreak in China.

IMAX's fourth-quarter results by the numbers


Q4 2019

Q4 2018


Analyst Consensus


$124 million

$109 million


$117 million

GAAP net income

$21 million

$3.8 million



Adjusted earnings per share (diluted)





Data source: IMAX. GAAP = generally accepted accounting principles.

IMAX recorded $1.11 billion in global box office receipts in fiscal year 2019, a 7% increase over the reading in 2018. Management had expected "low double-digit" growth for this important metric. After installing 56 net new multiplex theaters during the fourth quarter, IMAX now manages 1,529 commercial theaters. That's an 8.5% increase from 1,409 multiplexes in the year-ago period.

Big trouble in Greater China

Greater China accounted for 31% of IMAX's fourth-quarter and full-year revenue. The company has 702 commercial theaters installed in this region, up from 621 at the end of 2018. There's also a backlog of 253 theater orders to install in Greater China, or 48% of IMAX's total backlog.

While the company's massive exposure to the growing Chinese market is exciting, it also exposes IMAX to fallout from the coronavirus outbreak. In the earnings call, IMAX CEO Rich Gelfond said that all theaters in China are closed until further notice, slamming the brakes on strong business trends in that market.

"Our 2019 Greater China box office of $366 million was at an all-time high and grew by 9% year over year or 14% in constant currency, significantly outpacing the market growth of 5%," Gelfond said. "And nine of the Top 10 titles in China had an IMAX release in 2019, demonstrating our continued high hit rate, which has been driven by our flexible programming strategy."

The IMAX logo at the top of a building

Image source: IMAX.

Poised for a Chinese rebound

Gelfond sees the coronavirus as a serious challenge in the near term that should eventually pass and allow a return to normal growth. Titles slated for IMAX premieres during this outage will be rescheduled for later release dates.

"We believe that consumers will be eager to get out of their homes and return to shopping malls and cinema complexes for out of home entertainment, driving a rebound in box office, which is what occurred in Hong Kong post the SARS outbreak in 2003," Gelfond said.

Is IMAX a buy today?

Given the unpredictable nature of the coronavirus problem in IMAX's largest market, the company declined to issue guidance targets for the next quarter and fiscal year. CFO Patrick McClemont only said that box-office results in other markets are trending in line with internal projections halfway through the first quarter. Theater installations continue as planned, except for a pause in Chinese expansion projects.

IMAX shares fell 16% year to date before this report arrived, pricing the coronavirus shutdown into the stock price in a big way. The stock trades at 18.5 times trailing earnings, a multiyear low that looks a lot like an inviting buy-in window. The stock may fall even further if the coronavirus tragedy keeps theaters closed much longer, but I think it's hard to go wrong with an IMAX investment at these attractive prices.