Box Office Revival: 3 Movie Theater Stocks Making a Comeback

Key Points

• AMC Entertainment is the world's largest movie theater operator, with over 900 locations and more than 10,000 screens, but it has yet to earn a profit since the pandemic.
• Cinemark is the third-largest movie operator in the United States. It has been profitable and has grown revenues by double digits.
• IMAX is an asset-light technology company that earns money by selling, upgrading, maintaining, and leasing its proprietary technology and equipment and through box office revenue-sharing agreements.

The pandemic accelerated the video streaming migration, which was the death knell for the cinema business. Movie theater stocks haven’t made headlines since the meme stock mania in 2021. However, in 2024, their stocks have been hiding in plain sight while making stealth recoveries. The advent of blockbuster movies like the Walt Disney Co. NYSE: DIS Marvel release of Deadpool and Wolverine swept box office records, raking in over $620 million domestically, becoming the fifth highest-grossing superhero movie and $1.3 billion worldwide. While the rest of the consumer discretionary sector is hurting from a weak consumer, the experiential nature of movie theaters continues to draw them in new record numbers. Here are three stocks making a comeback from the movie theater business.

Strong Box Office Performance Boosts AMC’s Future Prospects

The world’s largest movie theater operator, AMC Entertainment Inc. NYSE: AMC, has been staying out of the spotlight. The company has been a meme stock widow maker that surged as high as $393.63 pre-split on June 1, 2024, spawning a new wave of meme-stock warriors called the AMC Apes. Unfortunately, the stock continued to suffer dilution even after creating the infamous APE units that were supposed to prevent dilution but eventually converted to common shares, thereby diluting the float again. To "un-dilute" the shares, the company performed a 1-for-10 reverse split on August 24, 2023, that promptly sold off from $16.60 to a low of $2.38 on April 16, 2024.

While AMC hasn’t moved anywhere near its 52-week highs, the stock has stabilized in the $4.00 to $5.00 range since May. Shares are trading down 19.4% for the year. 

It reported an EPS loss of 43 cents in its second quarter of 2024, matching consensus estimates. Revenues continued to slump 23.1% YoY to $1.04 billion, but it beat consensus estimates for $1.03 billion. Deadpool and Wolverine helped AMC record its highest-ever opening weekend attendance and highest-ever opening weekend admissions revenue for a rated R movie. The consensus analyst price target is 15% higher at $5.70.

Cinemark Outperforms, Returning to Profitability in 2024  

Cinemark Holdings Inc. NYSE: CNK is the third-largest theater chain in the United States, with 308 movie theaters and 4,303 screens in 42 states. It’s also the largest operator in Argentina and Brazil and the second largest in Chile, Columbia and Peru. The company offers a Movie Club membership plan starting at $10.99, enabling 1 free movie ticket a month, waiving online ticket fees and discounts on concessions.

The biggest difference between Cinemark and AMC is that Cinemark is back to earning profits. Cinemark theaters tend to be in suburban areas with lower rents.  Cinemark earned 32 cents per share in its second quarter of 2024, handily beating consensus estimates by 24 cents. Revenues grew 22.1% YoY to $734.2 million, beating consensus estimates of $691.74 million.  It's no wonder the stock is trading near its 52-week highs and up 102% year-to-date (YTD). Analysts have a consensus price target that’s 11.5% lower at $25.20, but the highest analyst forecast is priced at $31.00 per share.

IMAX Beats Q2 Earnings Expectations, Raises Installation Guidance

If you’re a movie theater buff, you’ve heard of IMAX Co. NYSE: IMAX and have likely experienced an IMAX movie. Their 15/70mm format provides 40% more images on the screen with up to 18K resolution. Their 59 x 79-foot curved movie screens and blaring audio surround sound are the epitome of an experiential movie experience, and they just can't be duplicated at home. IMAX makes its money by selling and leasing IMAX systems to theaters and cameras to production companies and through revenue-sharing deals with cinemas.

IMAX reported EPS of 18 cents for the second quarter of 2024, handily beating consensus estimates by 13 cents. Revenues slipped 9.2% YoY to $88.96 million but beat consensus estimates of $74.52 million. Signing for new and upgraded IMAX systems rose 89% YoY to 87. IMAX system installs rose 20% to 24, prompting them to raise installation guidance to 130 to 150 systems in 2024, up from 128 in 2023. This asset-light stock is up 14.8% YTD. Consensus analyst targets suggest 14.5% more upside to $23.78, with a high forecast of $30.00.