The most well established industry to invest in in 2024 is the entertainment industry. And while we talk about entertainment, it’s easier not to miss Cineplex Inc.
Cineplex Inc (TSE: CGX) Company Profile
Founded in 1912, Cineplex Inc. is headquartered in Toronto, Canada. Cineplex Inc., along with its subsidiaries, functions as an entertainment and media company both in Canada and internationally. It operates through three main segments: Film Entertainment and Content, Media, and Location-Based Entertainment.
The company is involved in theatre exhibitions, food services, and alternative programming, which includes international film programming and Event Cinema content like The Metropolitan Opera, sports events, concerts, and special event screenings. Cineplex also runs cineplex.com, a website that provides streaming video, movie details, showtimes, ticket purchasing, entertainment news, and box office updates, along with advertising and digital commerce solutions.
Additionally, they offer the Cineplex mobile app and the Cineplex Store, which features on-demand video services, including Home Premiere with premium video-on-demand and premium electronic sell-through services.
Cineplex incorporates advertising related to theatre exhibitions and offers digital signage and in-store retail media networks for brands in shopping centers, restaurants, retailers, and entertainment venues.
The company also operates location-based entertainment venues such as The Rec Room, aimed at millennials and offering various entertainment options like simulations, arcade games, and live shows; Playdium targeted at teens and families; and Cineplex Junxion, which combines movies, arcade games, dining, live performances, and in-theatre gaming centers. Furthermore, they run Scene+, a customer loyalty program that provides discounts and the ability to earn and redeem points.
How has Cineplex been doing for past few months?
Cineplex has announced a solid box office revenue of $33.9 million for May 2024, amounting to 71% of last year’s earnings for the same month. Major releases such as ‘Kingdom of the Planet of the Apes’ and ‘Furiosa: A Mad Max Saga’ significantly contributed to the revenue, particularly through premium viewing experiences.
Cineplex is optimistic about the upcoming summer season, buoyed by strong pre-sales for ‘Deadpool & Wolverine,’ and expects a resurgence in box office performance in the latter half of 2024.
Cineplex Inc. (TSE: CGX), a major player in Canada’s entertainment and media sector, has been navigating a challenging financial landscape. Here are some key points about its recent financial performance:
Revenue and Earnings: For Q1 2024, Cineplex reported earnings per share (EPS) of -C$0.56, which was significantly below the analyst consensus of -C$0.15. However, the company’s revenue for the quarter was C$294.76 million, slightly exceeding the expected C$292.60 million.
The company reported an impressive 26% growth, contributing to a substantial 232% revenue increase over the past three years. Shareholders likely appreciated this robust medium-term revenue expansion.
Looking forward, six analysts project an annual revenue growth of 4.3% for the next three years. In contrast, the industry is expected to achieve a 9.7% annual growth rate, indicating that the company may underperform relative to its industry peers.
Stock Performance: Cineplex’s stock price has seen a decline over the past year, with a 1-year change of -7.33%. As of the latest data, the stock is trading around C$8.32, with a 52-week range of C$7.10 to C$9.76.
Valuation and Market Position: The company has a price-to-earnings (P/E) ratio of 2.57 and a market capitalization of approximately C$523.48 million. Analysts have set a price target of around C$12.58, indicating a potential upside.
Operational Segments: Cineplex operates through three main segments: Film Entertainment and Content, Media, and Location-Based Entertainment. These include theater exhibitions, alternative programming like sporting events and concerts, and digital commerce solutions through platforms like cineplex.com and the Cineplex Store.
Recent Developments: Despite missing earnings expectations, Cineplex reported a slight increase in Q1 2024 box office revenues to $125 million, reflecting a 1.4% rise despite a broader market decline in North American box office sales.
Overall, Cineplex is facing financial challenges but continues to leverage its diverse entertainment offerings and digital platforms to stabilize and grow its revenue streams. The company’s performance in the coming quarters, particularly with the anticipated summer blockbusters, will be crucial for its financial recovery.
Canadian sports are experiencing a transformation, with cricket rapidly rising in popularity. With a dedicated fan base exceeding 3 million and 300,000 active participants, cricket is now played in all ten provinces across Canada. Considering this fact, Cineplex made a bold move by playing all T20 World Cup matches in theaters and also streamed live.
Forecast for Cineplex (TSE: CGX)
Forecast for Cineplex (TSE: CGX)
When we look at the CGX price, we see that the stock price faced a huge decline to 4.32 CAD after Covid 2020 and has been trying to push higher since then. The price formed a bullish flag pattern and broke above the resistance of the flag a few weeks ago. Which means the stock is ready to go higher. How high? It will be hard to assume because, in my opinion, the first target should be around 16.52 CAD, and after that, the second target should be 22.34 CAD.
According to TradingView analysts, TSE: CGX stock is a strong buy, and the most optimistic targets for the near future are 10 CAD, 12.58 CAD, and 14 CAD.
Author: Rana Adnan
I’m a full time forex trader and content creator. I’ve been trading for 8 years and have worked with different individuals and companies in trading education space.