The biggest winner on Academy Awards night won’t be the actors taking home the Oscar—it will be investors in Mississauga-based IMAX Corporation (TSX: IMX), which has made a boatload of money off some recent box office hits.
On February 21, the Canadian movie chain released its fourth quarter numbers and, as B. Riley analyst Eric Wold puts it, the results were “impressive.”
Revenues topped $105 million—nearly $15 million higher than Wold’s estimates. EBITDA was $52.2 million, while earnings per share came in at $0.44, beating his $0.35 estimate.
The reason for the rise was twofold: The company built 54 new theatres last quarter, while gross box office hit $244.5 million, 61% higher than the previous year.
Steven Frankel, an analyst with Dougherty & Company, points out that 54% of those box office revenues came internationally. It’s done a good job of picking and choosing which movies to show outside of North America, he wrote in February 20 report.
“IMAX continues to benefit from active management of the international film slate, combining local titles, such as the recent success of The Monkey King in China and international only showings of selective Hollywood titles to optimize the box office,” he writes.
Both analysts are bullish on the company’s upcoming fiscal year. Frankel expects the company to build 100 to 125 more theatres in the 2014 and thinks revenues will grow by 21% between 2013 and 2015. Wold expects its ticket intake to stay strong and says EBITDA should grow by 50% over the next two years.
“We continue to believe the flexibility of the IMAX model enables IMAX to keep a full film slate even during, what could be considered, slower release periods,” writes World. He thinks the company can increase its box office by 9% in fiscal 2014 and 15% in 2015.
The stock is currently trading at about $30, but that will rise as the blockbuster hits keep coming. Frankel has a $38 12-month price target — he raised it from $34 after its Q4 results announcement — while Wold has a $34 price target.
