IMAX

IMAX has decisively turned the corner from its COVID-era losses into a profitable, cash-generative platform. FY2025 revenue grew 16.5% to $410M with operating income up 92% to $84.2M, lifting operating margin to 20.5% on a 60% gross margin — evidence the model is scaling, not just recovering. The MD&A frames why: a record $1.28B global box office (surpassing the 2019 peak by 13% and up 40% YoY), the largest film slate in company history (122 titles), and a network that grew to 1,864 systems in 91 countries. This is an asset-light, royalty-and-maintenance business — IMAX owns only one of its locations and collects recurring annual payments from exhibitors — which explains the clean balance sheet (long-term debt was nearly extinguished, cash up 50% to $151M against $338M equity).

The headline 64x P/E is the central reason this is mispriced rather than overpriced. Diluted EPS of $0.63 is depressed by $62.4M of non-cash D&A, so accounting earnings badly understate economics. Operating cash flow jumped 79% to $127M and capex was just $8.17M, implying roughly $119M of free cash flow against a $2.19B market cap — about 18x FCF and a ~5.4% FCF yield. For a brand-moated platform compounding revenue at mid-teens with 90%+ operating-income growth, that is a fair-to-attractive price, and the 5.3x P/S sits in a reasonable band for the margin profile.