Please ensure Javascript is enabled for purposes of website accessibility

IMAX Corp. Disappoints on the Bottom Line and Shares Slide Despite Long-Term Upside

By Daniel Miller - Feb 25, 2016 at 12:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It wasn't the quarter investors expected when the stock gained 11% mid-February after Deadpool's success at theaters became apparent -- but 2015 was still a solid year for the company.

Image source: IMAX Corp.

What: Shares of IMAX Corp. (IMAX -0.59%), an innovative movie entertainment company, essentially gave back all its gains from mid-February when investors jumped on board after hearing the box office success of Deadpool had fueled business at IMAX theaters across the globe.

So what: It's not unusual for big blockbuster movies to drive revenue and earnings volatility at IMAX, and investors believed Deadpool, in addition to a huge Star Wars movie, would ensure a solid quarter for IMAX. Unfortunately, despite a pretty solid quarter and full-year results, it didn't live up to high expectations on the bottom line. IMAX reported adjusted earnings of $0.39 per share during the fourth quarter, which was $0.05 below consensus estimates, albeit still a 14.7% increase compared to the prior-year result.

Now what: While IMAX didn't live up to expectations during the fourth quarter, it was, in my opinion, still a solid year for the company and its investors. IMAX's full-year global box office reached $1 billion, which was a 31% gain over 2014 and significantly higher than the worldwide industry box office growth of about 10%.

Furthermore, management also raised its installation guidance for 2016 from the 115-120 range to 135-140, which should help alleviate concerns about IMAX installing only 12 new theater systems during the fourth quarter, compared to the 26 from 2014's fourth quarter. The upside for IMAX hasn't changed due to the fourth quarter -- it was just a stock giving back gains after the success of Star Wars and Deadpool fueled investors to jump on board prior to the earnings call.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

IMAX Corporation Stock Quote
IMAX Corporation
$16.79 (-0.59%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.