Movie theatre operator and entertainment company Cineplex (TSX:CGX) hasn’t made for a great investment in recent years. Lockdowns during the pandemic led to some disastrous results and now rising inflation has been hurting the business as well. In five years, shares of Cineplex have collapsed by more than 70%.
However, the company recently released its box office revenue for the first few months of 2023, and there is some promise that things are improving. During January and February, the company’s box office revenue was nearly back to prepandemic levels, with sales at 88% of what they were back in 2019. The company is optimistic that a “robust slate of blockbusters” for the remainder of the year will help lead to more growth as the year goes on.
CEO Ellis Jacob says that, “not only are consumers clearly showing a strong interest in coming to our theatres, but theatre food service revenues exceeded the same month in 2019 and we continue to see significant growth in attendance for premium experiences.”
Last year, Cineplex’s sales totaled $1.3 billion, nearly double the $656.7 million it reported in 2021. But it was still down from the $1.7 billion it reported back in 2019. The company also got back to breakeven last year, after multiple years of deep, six-figure losses.
Cineplex is a risky stock but with demand showing improvement, it could be a calculated risk worth taking. The stock is currently trading at a forward price-to-earnings multiple of 18. If you’re bullish on the economy, this might be a good investment to load up on right now.