Cineplex Stock Is Red Hot: Here’s Why I’m Buying Today

Cineplex Inc. (TSX:CGX) stock has soared so far in 2023, and it appears on track to deliver strong growth going forward.

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Cineplex (TSX:CGX) is a Toronto-based entertainment and media company that operates in Canada and around the world. Today, I want to discuss why Cineplex stock is on my radar, even after its impressive run-up in the month of June. Let’s jump in.

How has Cineplex stock performed over the past year?

Shares of Cineplex have climbed 10% month over month as of early afternoon trading on June 6. The stock is now up 20% so far in the year-to-date period. Investors who want to see more of its recent performance can play with the interactive price chart below.

Here’s why I’m excited about the cinema industry right now

The traditional theatre industry was faced with an existential crisis during the COVID-19 pandemic. Indeed, the pandemic threatened to deal additional damage to an industry that had taken its lumps due to the rise of home entertainment alternatives like Netflix and other streaming giants. However, there has been some oversaturation in this space, while the reopening of cinemas has led to some positive rebounds.

This year has seen some strong performances from new releases. The biggest release of the year remains The Super Mario Bros. Movie, which raked in $566 million at the domestic box office in North America. Rounding out the rest of the top five are Guardians of the Galaxy Vol. 3, Avatar: The Way of Water, Ant-Man and the Wasp: Quantumania, and the recent release of The Little Mermaid rounding out the fifth spot and quickly gaining steam.

Investors should be optimistic about cinema traffic for the remainder of 2023. Some of the biggest releases in the coming weeks and months include the fifth instalment in the Indiana Jones franchise this June, the Barbie movie, and Mission Impossible: Dead Reckoning in July. These films have the potential to add to Cineplex’s revenue and earnings totals in the quarters to come in fiscal 2023.

Should investors be pleased with this company’s recent earnings?

Cineplex unveiled its first-quarter fiscal 2023 earnings on May 12. The company delivered total revenue growth of 49% to $341 million. Meanwhile, theatre attendance improved by 46% to 9.76 million consumers. Adjusted earnings before interest, taxes, depreciation, and amortization increased 72% year over year to $62.7 million. Its net loss improved to $30.2 million compared to $42.2 million in the first quarter of fiscal 2022.

Ellis Jacob, president and chief executive officer of Cineplex, heaped praise on the company’s recent earnings. He added that the company posted its highest ever combined April box office and theatre food services revenues in April 2023. Investors who refused to count out the traditional theatre have been rewarded in recent months, and there are signs of further growth in the quarters to come.

Cineplex: Why I’m buying right now

Shares of Cineplex are geared up to deliver solid revenue growth going forward. The company has vaulted back to profitability and is on track to deliver strong results, as the film release schedule looks strong.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends Cineplex and Netflix. The Motley Fool has a disclosure policy.

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