As a company, IMAX has focused on three priorities, penetration, differentiation, and scale. The company is pursuing international penetration in Australia, Turkey, Indonesia, Chile, Russia, Italy, and Canada having recently signed deals to open 25 theaters in these countries. China also plays an important role for IMAX. As the country’s middle class grows, the cinema market expands.
The company is working to get both Hollywood and Chinese films into IMAX theaters in China. It recently had success with Stephen Chow’s Journey to the West, a local language film that grossed more than $7.5 million in IMAX theaters. IMAX continues to improve screens by researching laser technology that allow for greater clarity and contrast, but it is clear that the majority of growth potential lies in the $2.5 billion international market.
With quarterly earnings growth of 14%, a forward P/E ratio of 21.57, and PEG of 0.93, IMAX looks like it could be a promising investment in a slowing cinema market.
With the success of IMAX Corporation (USA) (NYSE:IMAX) overseas and dropping domestic theater attendance, international expansion is crucial for cinema companies to grow. Right now, movie theaters are looking for attractions to draw in consumers which can only mean good things for IMAX. IMAX is a well-known brand that is continuously improving the quality of its product. I’d stay away from the theater companies, but think IMAX is a good investment that could bring returns that are as big as its screens.
Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Imax. The Motley Fool owns shares of Imax. Ben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Which Cinema Stock Will Give You Max Returns? originally appeared on Fool.com and is written by Ben Popkin.
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