NEW YORK (TheStreet) -- Shares of IMAX Corp. (IMAX) are up 4.41% to $28.89 in premarket trade after the Canada-based entertainment technology company said it planned to sell 20% of its Chinese subsidiary to local investors for $80 million.
The move may eventually lead to a listing of the unit in Hong Kong.
The company will sell a fifth of IMAX China Holding Inc. to investment fund China Media Capital and private equity firm FountainVest Partners.
TheStreet Ratings team rates IMAX CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate IMAX CORP (IMAX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 4.0%. Since the same quarter one year prior, revenues rose by 35.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- IMAX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- IMAX CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, IMAX CORP increased its bottom line by earning $0.63 versus $0.61 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 116.0% when compared to the same quarter one year prior, rising from $12.88 million to $27.83 million.
- The gross profit margin for IMAX CORP is rather high; currently it is at 63.64%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.49% significantly outperformed against the industry average.
- You can view the full analysis from the report here: IMAX Ratings Report