Imax Shares Set To Hit New 52 Week Highs On Strong Lineup And Increased Backlog

| About: IMAX Corporation (IMAX)

Theater operator Imax (NYSE:IMAX) released third quarter earnings Thursday. Shares of the company rose 3.7% to hit $22.51, after beating revenue and earnings per share estimates. The company also updated guidance for theater installations, and announced new backlog numbers.

Imax saw revenue hit $80.7 million in the third quarter. Analysts were looking for $76.1 million, after the company posted revenue of $67.5 in last year's third quarter. Net income was $17.9 million, representing $0.26 in earnings per share. Analysts were looking for earnings of $0.21 per share. System revenue hit $25.4 million. The company earned $13.2 million from joint revenue sharing theaters. This marks an increase of 31.9% from last year.

Joint revenue sharing theaters represented 287 of the company's ending theater count. In last year's third quarter, the company had 218 joint revenue theaters. This newer theater type provides additional revenue for the company. In the third quarter, Imax installed 33 new theaters. The company announced it had signed an additional 41 theaters, including many in international markets.

At the end of the third quarter, Imax had 689 total theaters, of which 556 were commercial theaters. In the fourth quarter, Imax will open 46 new theaters from its current backlog. Imax updated 2013 guidance during the conference call. The company will be looking to open 110-125 theaters, after opening 110 in the current fiscal year. Current backlog for Imax theaters stands at 285.

In the third quarter, Imax saw DMR revenue of $25.2 million, an increase of 35.6%. The total gross box office of DMR movies represented $173.2 million, which was split between Imax and large movie companies.

One of the new key international markets is India. On the conference call, the company touched on how India had four Imax theaters open, and an additional nine signed to the backlog. One of the key tests for this market will be "Dhoom 3" next year. The movie filmed in Bollywood will attempt to bridge the gap between IMAX and India's film market.

Along with an increase in theater installations and signings, Imax is seeing demand for directors using their cameras for movies. Next year's "Star Trek" sequel and "Catching Fire" are two examples of movies that will use IMAX cameras to shoot specific scenes. Another trend is opening movies early in Imax theaters, which I mentioned in my recent article on "Skyfall", the newest James Bond movie.

I have covered Imax earnings now in both the first and second quarters. The company earned $0.09 and $0.22 respectively in those quarters. With an added $0.21 today, the company has now earned $0.52 on the fiscal year. Analysts are looking for the company to post $0.21 in the fourth quarter, which would turn into earnings per share of $0.73 for the fiscal year. The following year, analysts see the company reporting earnings per share of $1.03.

The rest of Imax's 2012 lineup includes:

· "Paranormal Activity 4"

· "Cloud Atlas"

· "Skyfall"

· "The Hobbit: An Unexpected Journey"

In International markets, Imax screens will show:

· "Tai Chi Hero" (ASIA)

· "Breaking Dawn Part 2" (United Kingdom, Select International)

· "Back to 1942"

· "CZ12"

Imax continues to expand its 2013 slate of movies, which includes:

· "Hansel & Gretel: Witch Hunters"

· "Jack the Giant Killer"

· "Oblivion"

· "Star Trek: Into Darkness"

· "Man of Steel"

· "Gravity"

· "Stalingrad" (Russia)

· "The Hunger Games: Catching Fire"

· "The Hobbit: The Desolation of Smaug"

· "Dhoom 3" (India)

Imax's back end of the season looks strong with the early release of "Skyfall" and the huge anticipated blockbuster "The Hobbit". The early release of "Skyfall", along with it being the first James Bond movie on Imax screens should get additional fans to try out the larger than life screen. I see Imax hitting or beating fourth quarter estimates. I think shares are undervalued as 2013's lineup continues to strengthen. The key areas of growth remain international markets and joint revenue sharing programs, both strong points for the company at the present time.

Disclosure: I am long IMAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.