December 13, 2018

Cineplex (CGX)

 

 
Most of you are probably fairly familiar with Cineplex (CGX) as their brand has almost become synonymous with going to the movies in Canada.  They are the largest motion picture company in Canada and their brands include Cineplex Odeon, Silvercity, and Famous Players movie theatres.  Overall they own 129 theatres that serve roughly 70 million people annually.  The company headquarters are located in Toronto, and Cineplex (CGX) employs more than 10,000 people across the country.

 

cineplexMany people have been predicting the downfall of “a night at the movies” for a long time now.  The theory goes that with so many more convenient options available for people’s entertainment, the theatre just can’t compete.  While there may be a ring of truth to the idea that big screen TVs, 3-D home entertainment units, and the internet have cut into the consumer base slightly, there is obviously more than enough people still in the market to make it very profitable.  I believe there is likely something about a night out of your house, experiencing entertainment with a group of people and feeling that “electricity” of a new movie that will never go out of style.  That being said, there is no question that new innovations such as Netflix have brought significant challenges to the industry, and Cineplex will have to keep on their toes to stay ahead of the curve.

 

There is also little question that as an entertainment medium that depends on advertising for a large share of its revenue, Cineplex has been at a disadvantage over the past few years.  It is well documented that within the industry there have been many revenue shortfalls due to the fact that big companies that would traditionally supply the big advertising dollars just couldn’t find it in their budget to put that much money forward the last few years.  This makes sense since it is pretty well known that when a company looks to cut costs, advertising is one of the first things to go.

 

Despite these challenges to the whole media sector Cineplex (CGX) has seen their revenues increase over 17% over the last year, and their profits have shot up over 26% during the last three years (again worth nothing that these numbers were achieved in bear market).  As companies’ balance sheets begin to improve look for profit margins to go up for Cineplex as their advertising dollars start to pour back in.  They have a great Price-to-Earnings ratio of just over 10 right now, and offer a juicy 5% dividend yield.  Cineplex is definitely well positioned within the industry and I would not be surprised to see them increase their dividend when the market picks up, and possibly even step up their acquisition efforts.

 

Cineplex (CGX) Dividend Stock Graph:

TSE CGX

 

Cineplex (CGX) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CGXCineplex Inc26.164.93113.04Theaters0.281.850.00

 

 

Trackbacks

  1. […] (CGX) is the largest motion picture company in Canada.  They own 129 theatres that serve roughly 70 […]

Speak Your Mind

*