I personally have not scene Avatar or Alice in Wonderland but man did they make some money this past holiday/winter season. Alice in Wonderland had the biggest opening weekend for a
3-D movie ever and who was behind all this? IMAX, before hits like Avatar and Alice in Wonderland IMAX was known for their big educational movies involving dinosaurs, sharks, etc. Which in itself was a great market niche for the company but now there is a vast array of other movies that could really turn this company into a major player in the motion picture industry.
Let's first look at this company and see what makes it tick, well first off it's the one and only 3-d making movie company out there. Competitors include regal, cinemax, AMC, how ever the only reason they are competitors is because IMAX does have its own theaters but has since come together with its competitors and made their 3-D technology available to their movie theaters. It's a great move to get the mainstream audience to become adapted to 3-D entertainment. For just an extra $3.00 a customer can enjoy a good movie in 3-D which is a boon for the movie companies. Now a good story with 3-D graphics can become a box office hit as long as it's appealing to the 3-D eye.
Financially the company is pretty sound, it's trading at about 100 times earnings but the fact is that 2009 provided the first profit in nearly 3 years and 75% percent of the profits were made in the last quarter. About the same time Avatar came out, IMAX has had 2 back to back hits with Avatar and Alice and Wonderland leading to a 40% increase in revenue over the year. Now if you take into account the summer block busters coming out (Dreamworks movies, Hubble Telescope, Clash of the Titans, Iron Man 2) we could see 120% increase in revenue. Now I really do not think this is far fetched since a lot of people are enjoying this 3-D ride and forget the cost of buying a 3-D tv. Just spend the extra $3.00 and see a brand new movie on the big screen. That's a much better deal than spending $3,000.00 on brand new technology.
Some negatives about this company is the overall liabilities this company has. Short term debt has doubled since last year along with paid in additional capital. Return on equity is pretty low how ever these are all figures over 11 months (January to November). Earnings are not out yet for Imax's 1st qtr but I believe we could see near $.30/share for the 1st qtr. Which would really send IMAX stock high. If they can keep generating cash then their current liabilities will be an after thought.
So go see Avatar and Alice and Wonderland...oh and go buy IMAX too...it's a steal at $16.00
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