IMAX Down 15.1% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for IMAX Corporation (NYSE:IMAX) . Shares have lost about 15.1% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is IMAX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Fourth-Quarter Earnings

IMAX Corporation's fourth quarter of 2017 earnings per share (excluding 26 cents from non-recurring items) of 34 cents came in line with the Zacks Consensus Estimate. Moreover, the bottom line improved 54.6% year over year, on the back of higher revenues.

Total revenues of $125.6 million were better than expected in the quarter and up 17.4% year over year. The metric was positively impacted by robust box-office revenues. The top line also surpassed the Zacks Consensus Estimate of $118.8 million.

Adjusted EBITDA margin excluding Marvel’s Inhumans impact in the quarter under review was 37.4%. While global box office revenues at IMAX increased 13% to $278 million.

Category-wise, Equipment and product revenues were $39.7 million, down 3.9% from the year-ago figure. Services revenues totaled $62.33 million, up 41.6%. Rentals revenues totaled $21.14 million, up 12.6%. Finance income revenues were $2.38 million, down 5%.

Segmental Results

IMAX Theater Business generated revenues of $55.53 million, up 4.7% year over year. Within this segment, IMAX system sales and sales-type leases were $31.68 million, up 2.2%. Ongoing fees and finance income was $2.65 million, up 3.9%. Joint revenue sharing arrangements-fixed fees were $5.58 million, down 6.5%. Theatre system maintenance was $11.92 million, up 14.7% while Other Theatre revenues climbed 19.2% to $3.7 million.

Network Business logged revenues of $53.78 million, up 13% year over year. Within this space, IMAX DMR was $31.72 million, up 14.8%. Joint revenue sharing arrangements-contingent rent was $20.74 million, reflecting an increase of 12.1% while IMAX systems-contingent rent deteriorated 10.2% to $1.3 million.

Other segments grossed revenues of $3.24 million, down 48.3% year over year. Within this segment, Film distribution and post-production plunged a massive 58.5% year over year to $1.8 million while Other revenues tumbled 25.2% to $1.4 million.

Liquidity

The company exited the year with cash and cash equivalents of $158.73 million compared with $204.76 million at the end of 2016.

Network Growth Statistics

The company installed 170 theaters (including 5 upgrades) at the end of 2017 compared with 182 (including 16 upgrades) at the end of 2016. It signed 177 theatre agreements in the year, down a significant 44.5% on a year-over-year basis. As of Dec 31, 2017, the total theater count in backlog was 499 compared with 498 a year ago.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted downward by 37.5% due to these changes.

IMAX Corporation Price and Consensus

VGM Scores

At this time, IMAX has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

IMAX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.