Source: Wikimedia Commons. 

2013 was a strong year for movie theater operators like IMAX (IMAX 2.52%), Cinemark Holdings (CNK -0.67%) and Regal Entertainment (NYSE: RGC). After Cinemark reported fourth-quarter results on Feb. 19, followed by IMAX a day later, shareholders now have a clear view of how each company performed. Given this visibility, which company holds the most appeal?

IMAX had reasonable results
For the year, IMAX reported results that were mixed. For the year, its revenue rose 1.8% from $282.8 million to $287.9 million. This increase was driven, for the most part, by a 3.3% rise in service revenue.

By the end of its 2013 fiscal year, the business had 837 locations in operation. This represented a 14.5% jump compared to the 731 theatres that were in operation a year earlier, and was mostly attributable to a 35% increase in its presence in China.

Looking at profitability, we see that its bottom line is alive and well. For the year, net income grew 6.7% from $41.3 million to $44.1 million. The disparity between the company's revenue and net income growth was largely due to a decrease in costs. IMAX saw its cost of goods sold decline from 45.8% in 2012 to 42.8% in 2013.

Cinemark's numbers look mediocre, but they are actually quite strong
As opposed to IMAX, Cinemark suffered when it came to profitability. For the year, the business grew its revenue an impressive 8.5% from $2.5 billion to $2.7 billion. The main driver behind the growth was its concession sales, which rose nearly 10% to $845.2 million.

In its fourth quarter, management stated that the company had 482 theatres in operation. This represents a 4% increase compared to the same period a year earlier and played a role in the company's rising sales.

From a profitability perspective, Cinemark failed to impress shareholders. Despite higher sales, the company reported a 12% decline in net income, which fell from $168.9 million to $148.5 million. This disappointing development isn't as bad as it appears. Due to a one-time charge of $72.3 million, relating to the early retirement of debt, net income was lower than it would have been. Excluding this loss, and a smaller charge management booked a year earlier, Cinemark's net income would have risen by about 10%.

Regal's where it's at!
For the year, Regal saw its revenue rise nearly 8% from $2.8 billion to $3 billion. In its most recent earnings release, the company stated that admissions revenue was the largest component of sales for the year, but both concession and other miscellaneous revenue rose at a quicker pace. In fact, its concession revenue jumped 9%, while its other revenue climbed 10%.

Looking at net income, Regal had even stronger results. Due to the rise in revenue, combined with unspecified gains, management reported that net income rose nearly 11% from $142.3 million to $157.7 million. Not too shabby.

So what's the verdict?
For the year, all three theatre operators had results that were reasonable but far from excellent. Given the disparity between them, you might think Regal is, hands down, the best. While this may be true, there is some downside to owning the company as shown in the table below:


 Source: As of Feb 21, MSN Money.

Based on the table above, we see that Regal is the least profitable of the three movie companies. Because of this, the business is also the cheapest, as shown by its 18.7 earnings multiple. Cinemark is slightly more profitable with a net profit margin of 5.5%, but this comes at a relatively higher cost of 22.4 times earnings.

With a 15.3% net profit margin, IMAX is about three times as profitable as its peers. For a long-term investor, IMAX looks to have the best potential, but it comes at a steep price of 42.5 times earnings. This suggests that the business could remain profitable, but any bumps in the road would likely trigger a significant drop in share price.

Foolish takeaway
Based on the results of Regal, Cinemark, and IMAX over the past year, it looks like IMAX presents the you with the greatest profit potential, but it does so at the risk of more serious downside. This means the business would probably be best suited for shareholders who believe its business is strong enough to warrant the risk. For those who aren't comfortable with a great deal of risk, both Regal and Cinemark make for interesting prospects that should be looked at in greater detail.