IMAX Corporation (NYSE:IMAX) came out with its third-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of US$37m crushed expectations, although expenses also blew out, with the company reporting a statutory loss per share of US$0.80, 109% bigger than analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from IMAX's eleven analysts is for revenues of US$315.8m in 2021, which would reflect a major 54% increase on its sales over the past 12 months. Earnings are expected to improve, with IMAX forecast to report a statutory profit of US$0.22 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$323.8m and earnings per share (EPS) of US$0.21 in 2021. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
The consensus has made no major changes to the price target of US$16.14, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic IMAX analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$12.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await IMAX shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that IMAX's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 54%, well above its historical decline of 4.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. Not only are IMAX's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards IMAX following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at US$16.14, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for IMAX going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for IMAX (1 doesn't sit too well with us!) that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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