There have been those who believed—even before the pandemic—that the movie theater was on the way out, replaced by home theaters and streaming video. But the theater keeps plugging along gamely, and Cineplex (TSE:CGX) recently released some numbers that show it’s still in the fight. However, it’s down over 2.5% in Friday morning’s trading, as the fight is clearly turning against it on at least some points.
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Cineplex rolled out its May 2024 box office revenues, and the news was not all that great. It posted C$33.9 million for the month, which proved to be both good news and bad news. The bad news was that that number represents just 71% of May 2023’s figure, and there’s no intervening pandemic response to explain the drop.
However, on a year-to-date basis, Cineplex is ahead of the North American box office figure—compared to 2019—by 4.76%. Four films made up 59% of the take: “IF,” “The Fall Guy,” “Kingdom of the Planet of the Apes,” and “Furiosa: A Mad Max Saga.” And for those last two, “premium experiences” made up a hefty part of the numbers: “Kingdom” pulled in 55.9% of its revenue from premium experiences, while “Furiosa” pulled 77.6% from premium.
The Premium Experience Multiplier Effect
That last point actually raises a key distinguishing feature and a major reason why theaters are still in play to this very day, even if in a somewhat diminished capacity. Those who believed that the home theater would surpass the cinema experience often noted, by way of caveat, that the experience would be valuable if it were appropriately augmented. Bringing in those “premium” features—IMAX screens, D-Box seating, dinner, or premium snack options—can make a lot of difference.
And with Cineplex’s latest numbers, we’re seeing a little more of what that “difference” looks like. Yet, economic factors also come into play, as we’ve seen with the overall decline against 2023’s figures.
Is Cineplex a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CGX stock based on four Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 25.66% loss in its share price over the past year, the average CGX price target of C$13.85 per share implies 90.08% upside potential.
