Will IMAX Corporation (IMAX) Flop For Investors? CKEC, CNK, RGC & PEJ

The shares of small cap IMAX Corporation (NYSE: IMAX) have slipped more than 10% this week on growth concerns - meaning it might be a good idea to take a closer look at the stock plus its performance verses other cinema stocks like Carmike Cinemas, Inc (NASDAQ: CKEC), Cinemark Holdings, Inc (NYSE: CNK) and Regal Entertainment Group (NYSE: RGC) along with the PowerShares Dynamic Leisure & Entertainment ETF (NYSEARCA: PEJ).

What Is IMAX Corporation?

IMAX Corporation uses proprietary software, architecture and equipment to create a unique entertainment experience in 767 Imax theaters in 54 countries. More specifically, the company operates in seven segments: 1) IMAX systems; 2) theater system maintenance; 3) joint revenue sharing arrangements; 4) film production and IMAX DMR; 5) film distribution; 6) film post-production, and 7) other.

As for Carmike Cinemas, Cinemark Holdings and Regal Entertainment, all three own movie theaters (Note: Cinemark Holdings has a number of theaters in Latin America) while the PowerShares Dynamic Leisure & Entertainment ETF tracks the Dynamic Leisure and Entertainment IntellidexSM Index which contains the common stocks of 30 US leisure and entertainment companies.

What You Need to Know About IMAX Corporation

What seemed cause IMAX Corporation's shares to start slipping was when Benchmark Co. analyst Mike Hickey initiated coverage of the stock with a "hold" rating along with a price target of $29.42 earlier this week as he expressed concern about growth possibly slowing – causing disappointing results for the next few quarters. He also expressed reservations about the company's fiscal 2014 movie lineup (such as "Frankenstein," ''RoboCop" and "Godzilla"). Nevertheless, he remains optimistic about IMAX Corporation's ability to charge premium ticket prices and expand overseas.

With that said, CNBC recently noted that while Hollywood suffered a weak first quarter thanks to a few bombs, a big rebound last summer helped to turn things around with the all-important summer box office season wrapping up more than 10% higher than last year - on track to beat the summer of 2011's record $4.4 billion in revenue. On the other hand, both the Daily Mail in Britain and the New York Times have recently reported waning interest or ticket sales for 3D movies. In other words, IMAX Corporation is in a fickle business and things can change rather quickly for the better or the worst.

Nevertheless and late last July, IMAX Corporation reported a 17% revenue increase to $82.3 million thanks to a 14% revenue increase to $17.1 million from sales and sales-type leases, a 17% revenue increase to $18.3 million from joint revenue-sharing arrangements and a 32% revenue increase to $26 million from production and digital re-mastering. There were also 284 theatre systems in backlog as of June 30, 2013, verses 280 theatre systems in backlog as of June 30, 2012 while net income rose 7% to $11.8 million.

However, the really big news was that IMAX Corporation and Wanda Cinema Line Corp., Asia's biggest cinema operator, have an agreement to make the latter the biggest international Imax operator with as many as 210 screens operating or planned. In addition and earlier in August, IMAX Corporation and CJ CGV, which operates South Korea's biggest cinema chain, announced a deal to add 35 theaters in China and five in South Korea.

Taking that into consideration, it looks like IMAX Corporation has still has plenty of room for potential growth in Asia.

Share Performance: IMAX Corporation vs. CKEC, CNK, RGC & PEJ

On Thursday, small cap IMAX Corporation sank 8.59% to $25.96 (IMAX has a 52 week trading range of $20.07 to $30.34 a share) for a market cap of $1.75 billion plus the stock is up 19.3% since the start of the year, up 30.4% over the past year and up 451.2% over the past five years. Here is a quick look at IMAX Corporation's performance verses that of Carmike Cinemas, Cinemark Holdings and Regal Entertainment Group along with the PowerShares Dynamic Leisure & Entertainment ETF:

As you can see from the above chart, IMAX Corporation has generally outperformed all of its peers except for Carmike Cinemas.

Finally, here is a look at the latest technical charts for all three:

The Bottom Line. Both new and existing investors should probably just sit back and wait for "Frankenstein," ''RoboCop" and "Godzilla" along with the movie reviews or box office receipt figures to come out before getting overly concerned here.