Stockchase Opinions

Greg Dean Cineplex Inc CGX-T DON'T BUY Apr 09, 2018

They are now under a bit of stress because people find other ways of spending their free time.

$31.350

Stock price when the opinion was issued

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WATCH

Covid hammered them, while a British company tried to buy them but aborted that deal (now in a lawsuit). It's not cheap seeing a movie, but he goes now and then. Movies are coming back, though. You can't duplicate the experience at home. Still a lot of uncertainty with this stock, though.

TRADE

He loves movies. Going to be tough to top last year's Barbenheimer. Rumours of the death of movies have been exaggerated. It's going to be a season-to-season, year-to-year stock, rather than a cyclical.

RISKY

Not your highest-quality play. Trying to get approval to extend debt schedule. If approved, will add flexibility and improve free cashflows. If all goes well, may be able to reinstate dividend. But a lot has to go right. Pricey at 27x. High risk, but now would be the time to allocate some capital. A lot of the bad news is already out.

Don't own in a registered account, as you want to take capital losses if you're wrong.

RISKY

Was a great business, cash cow. Deal to be acquired collapsed with the pandemic. Bad luck and bad timing. Stellar management team. Sold off a business to pay down debt, good decision. Movies aren't going away, so you could take a flyer on it.

DON'T BUY

Recent pullback since pandemic + sideways range not great for investors. Generally speaking, long term trend is not good. Better options for investors out there. 

DON'T BUY

More and more, content is being created for streaming platforms. The "theatrical windows" it used to be able to benefit from are getting shorter and starting to disappear. Struggling on growth. Elevated debt.

DON'T BUY

Volatile, avoid. Comeback in revenue since Covid. Fundamentally weak, broken down. Slightly beat on revenue, but missed earnings. Trading sideways. A big rebound would take more than the company's capable of at this point.

(Analysts’ price target is $12.58)
BUY

Broke the downward trend, upward trend hasn't broken. Positive when you're in an upward trend.

BUY ON WEAKNESS

Current share price reflecting value of business much better than during the pandemic. Attendance numbers continue to remain flat even with new steaming services. Expecting single digit growth of revenue. Brand name is very strong with large share of market. Cinema experience is still very good. 

DON'T BUY

Not his cup of tea. Doesn't own the actual real estate; instead long-term leases, but CGX has to spend the capital. Very capital intensive, and it's not even in control of its own destiny. He and his wife usually just stream content happily at home.