Leading global entertainment technology developer, IMAX Corp. (IMAX), yesterday announced that its board of directors has authorized the repurchase of $150 million of its common shares within the next three years. The company’s strong financial position and encouraging cash flow outlook allows management to raise its shareholders’ wealth.
Previously, IMAX’s business model emphasized on theater technologies and equipment sales. However, the company has gradually adopted Hollywood box-office selling as its integral business wing. Management is presently focusing on three factors, namely, scalability, product differentiation and penetration.
In the first quarter of 2014, IMAX signed 35 new theaters compared with 17 in the prior-year quarter. Total theater signing, at the end of the reported quarter, stood at 36 against 25 at the end of the prior-year quarter.
As of Mar 31, 2014, total theaters in backlog were 431 compared with 283 at the end of the same quarter of the previous year. IMAX’s international expansion offers several benefits. Per screen average (PSA) is $1.4 million per year in international markets compared with $1 million in the U.S.
In a separate development, IMAX has entered into a multi-picture agreement with The Walt Disney Co. (DIS) and received strategic investments in its Chinese venture. We believe that these developments will significantly benefit the company over the long-term. IMAX is also penetrating into European markets, which are economically most volatile.
Recently released movie, “How To Train Your Dragon 2” of DreamWorks Animation SKG Inc. (DWA) was digitally re-mastered into the immersive IMAX 3D format and released across all IMAX theaters in the U.S. on Jun 13, 2014.
IMAX currently carries a Zacks Rank #3 (Hold). Another better-ranked stock in the movie/TV production/distribution industry is News Corp. (NWSA), which carries a Zacks Rank #2 (Buy).