The previews are over, popcorn has been purchased, and it's finally time to start the main event at IMAX
When IMAX reported earnings yesterday, the market basically overlooked the fact that the company missed expectations on both the top and bottom line. What had everyone cheering is the rate at which IMAX screens are being put up. Fourth-quarter installation guidance was bumped from just 34 to 36 new IMAX screens to 49 to 59. At that pace, IMAX could double its 441-theater network every year.
Other than the increased installation guidance, the results were pretty pedestrian. Revenue was $67.5 million and adjusted earnings per share reached $0.16 on the back of Transformers and Harry Potter. The slate for the rest of 2011 isn't going to knock anyone's socks off unless Mission: Impossible -- Ghost Protocol is even bigger than expected. An exclusive week run at IMAX theaters will show just how much draw Tom Cruise still has.
A summer to forget
The summer movie season, which is usually filled with blockbusters, has left both IMAX and 3-D theater company RealD's
Foolish bottom line
I was surprised to see IMAX jump 12% in trading yesterday on results that didn't even meet expectations. Yes, the expanding theater network is a big plus and will be leveraged when blockbuster action films are released, but the backlog is well-detailed and management has been speeding up installations all year.
If IMAX can begin turning its growing theater network into more significant profits during next year's movie season, the stock could regain its mojo again. My popcorn is ready in anticipation.
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