IMAX Corp (USA) (IMAX)

It's a great product; but horrible margins, fluctuating earnings based on the whim of kid's interests, and negative book value (bleh!). Too many things have to change to justify over $9/share (sustained revenue growth, order of magnitude increase in margins, extra cash). Imax has alot of potential, but it's too dangerous right now.

Fundamentals are aweful

Irrational exuberance has sent the price of IMAX stock up way too high for its fundamentals. Negative profit margin, operating margin, return on assets, net income, even EBITDA and book value are negative. These are not signs of a healthy business.

As for the new theaters and movie deals, the fact is that there are are very few IMAX theaters. The new theaters that everyone is gushing about are not really IMAX theaters, they are existing standard-size movie theaters with their screens enlarged slightly, because you can't fit a real IMAX screen into a standard movie theater. So they are fake IMAX theaters, trading on the IMAX name to charge $5 extra to see a movie on a screen only slightly bigger. Guess how many repeat customers this will bring. Guess how much this will tarnish the IMAX name.

Am I missing something here? We have a firm that has been unprofitable over the past three years. They are provider of what is essentially a "luxury" theatre service. They have negative stockholders' equity and a good chunk of goodwill that even props up that figure a bit. They recently had to do a share offering to raise more capital. Even if they were to go back to 2005 levels of profitability and I add back depreciation and amortization to net income to come up with a free cash flow projection for my DCF analysis, I still only come up with a valuation around $7.

Mind you, I'm using a 11% cost of capital, which I feel is proper for a high-risk company like this, so maybe I could come up with a higher figure using a lower COC - but even with a 9% COC, I come up with a valuation around $9.25. And remember, there are a lot of *ifs* in that analysis. As in, *if* this company goes back to 2005 profitability levels and *if* I can assume that NI + DA is the best measure for a FCF analysis when actual FCFs have not been positive to begin with over the past three years.

I realize they have access to growth markets in India and China. That's a big plus, but I guess I'm still not convinced. I wouldn't go short on this because I haven't done enough research to assume that the market is wrong on India and China growth prospects, but if I were to see it creep to the $9 - $10 range, I'd become very tempted. However, at the current levels, I think this is a good underperform candidate.

IMAX is like the Chevy VOLT of theaters. The technology may have been ahead of its time, but its price and (un)availability gives time for rest of market to catch up and ultimately surpass it both in price, performance, and market breadth. There's a lot to be said about the tic-toc approach to innovation (See: Intel). Those that try to jump ahead more often than not fail.

They just don't have the WOW factor anymore.
IMAX still loses money and has negative cash flow. I would think theater owners would be hard pressed to spend the money to upgrade to the IMAX environment. I just don't see how they will outperform the S&P.

What was once a premiere brand for spectacular large theater experiences has been watered down and applied to standard size theaters. Even as they break records for the numbers of movies being shown on their screens, the screens themselves grow increasingly smaller and disappoint customers who may never pay that extra $5 again. Desperate and dirty moves from a dying company.

look at the company's ratios--it's just lagging too far behind the industry, too many negatives

This may be the reason 3D never catches on:

http://www.slate.com/id/2215265

I consider IMAX movies to be a luxury item don't you? It is a nice product but it is not one you absolutely need to enjoy a movie.
which begs the question how many people are going to choose to pay extra money to go to IMAX movies next year when they go out to theaters?

Supposedly people are so far and IMAX has landed some nice new contracts but I have a hard time seeing their growth continue as Americans are getting increasingly thrifty. Afterall IMAX tickets run about 25-40% more than your standard movie fare.

At any rate they are also not profitable and have a negative cash flow. IMAX is also trading at a decent premium to Sales so it certainly could fall again to the low Three's

Lastly don't believe the P/e stated on the CAPS page. it's inaccurate for some reason.
see for yourself
http://finance.yahoo.com/q?s=imax

Despite a growing demand for more "high tech" entertainment, this company's management has proven time and time again that they can't shoot straight. Combine that with shaky financial bookeeper and a growing chorus of dissatisfied shareholders and you trouble with a capital "T".

Great product, but poor delivery and management.

1) Negative equity, and is trending further into the red.

2) No plan for profitability.

3) If the U.S. continues into a recession, I doubt that theater companies will be taking on very many big investments such as IMAX systems.

4) Maybe a takeover target, but probably not in this credit market.

To own shares of Imax is to own shares of air.
This company's financial structure is carefully crafted to keep all money for those who own "Senior Notes". There is NO MONEY HERE for anybody else. When you buy shares of Imax you are buying the hype for this company, and that is all you own.

There are movie producers in Hollywood who would love to make a movie of your book. They will give you a contract in which you get 30% of the profits from the film. Guess what? There are NO Profits on any movie in the history of filmdom. You got it now?

Few locations, high ticket prices and money spent on more important items.

So long as they have dual-CEOs, and so long as they are unable to come up with digital projector design, they will not be able to maximize earnings. The CEOs have to quit, new management can take this one further. Unfortunately, I have lost money on this one. But I expect it to trade above $10 after next year, if they are still independent.

I've been watching this stock for a few years now. I just don't think it will become a big money maker -- it hasn't yet.

Worst stock on Wall Street. Only the 3 CEOs will make money.

Imax is a must if theaters are going to stay in business, especially if the 3D technologies are adopted by more filmakers. This company looks like such a good choice (a unique technology and a PE of

Totally stupid management. Company could not sell itself at $10/share, $5/share, or even $3/share. AVOID!