Canadian movie theater chain Cineplex (TSE:CGX) is down nearly 5% after posting a loss in the third quarter.
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The problem for Cineplex came from Canada’s Competition Tribunal, which levied a $39.2 million fine against Cineplex for “deceptive marketing practices.” In 2023, Cineplex posted a profit of $29.7 million, equal to $0.40 per share. But now, Cineplex posted a loss of $24.7 million, or $0.39 a share.
Cineplex is appealing the fine, though the chances of this going through are not assured. Meanwhile, revenue also took a hit, coming in at $395.6 million. That was down from $414.5 million a year earlier. However, revenue per patron was up at $13.19. Concession revenue also gained, going from $8.44 per patron to $9.85.
Cheap Movies and Possibly Fewer Theaters
Apart from the earnings report, there was some good news / bad news for moviegoers as there will be cheap movies to come, but potentially at fewer theaters. The good news is that $3.99 movies are coming back this month.
However, there may be fewer theaters to view the cheap movies in. Recent reports suggest that Etobicoke, a Toronto suburb, might be losing its Cineplex altogether as a developer is looking to convert the structure into “condo towers.” Without the Etobicoke theater, locals will have to drive into downtown Toronto to see movies.
Is Cineplex a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:CGX stock based on five Buys and one Holds assigned in the past three months, as indicated by the graphic below. After a 26% rally in its share price over the past year, the average TSE:CGX price target of C$13.01 per share implies 26.81% upside potential.
