Last update on 2024-06-07

Imax (IMAX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Comprehensive Piotroski F-Score Analysis of IMAX for 2023 with detailed financial insights. IMAX achieves a robust score of 8 out of 9, indicative of its sound financial health.

Short Analysis - Piotroski Score: 8

We're running Imax (IMAX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score of IMAX Corporation (IMAX) evaluates its financial health based on nine criteria, including profitability, liquidity, and operating efficiency. IMAX scored an 8 out of 9, indicating strong financial health. The detailed analysis reveals positive net income and operating cash flow for 2023, growing Return on Assets (ROA), higher operating cash flows compared to net income, a growing current ratio, reduced leverage, increasing asset turnover ratio, and expanded gross margins. However, leverage slightly increased and uncertainty exists around share dilution due to ambiguous data.

Insights for Value Investors Seeking Stable Income

Given its high Piotroski F-Score of 8, IMAX appears to be a solid investment opportunity as it demonstrates strong profitability, efficient liquidity management, and operational efficiency. Although there are concerns about increased leverage and potential share dilution, the overall financial health is strong. Investors looking for a robust and undervalued company should consider IMAX, keeping in mind the necessity to further investigate its debt management and share outstanding issues.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Imax (IMAX)

Company has a positive net income?

Net income is a company’s total earnings, which is a crucial metric indicating profitability. A positive net income signifies that the company is profitable.

For the year 2023, Imax (IMAX) reported a positive net income of $25,335,000, which is an encouraging sign indicating profitability. Over the last two decades, however, the company's net income has shown considerable volatility, with several years of negative figures, such as in 2006, 2007, 2008, and notably in 2020 with a substantial loss of $143,775,000. Given the current positive net income for 2023, IMAX would receive 1 point under the Piotroski analysis for this criterion. This positive trend is a good indicator of current profitability, but past volatility should be considered when assessing the financial stability of the company.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash a company generates from its regular business operations, excluding costs related to long-term investment on capital items or investments in securities. Positive CFO is crucial for a company's liquidity and ability to sustain operations without relying on external financing.

In 2023, Imax (IMAX) reported a Cash Flow from Operations (CFO) of $58,615,000. The positive CFO indicates healthy cash generation from the company's core operating activities. Historically, IMAX has shown a consistent ability to generate positive operating cash flows, with only three exceptions in the last 20 years (2003, 2006, 2007, and 2020). Recovering from negative cash flows in those periods demonstrates resilience and strong operational management. Thus, this criterion is met with a score of 1.

Return on Assets (ROA) are growing?

Change in ROA indicates the efficiency in generating profit from the assets. A positive change is favorable as it highlights improved utilization of assets.

Imax Corporation (IMAX) demonstrates a noteworthy improvement in its Return on Assets (ROA), showcasing an increase from -0.0268 in 2022 to 0.031 in 2023. This substantial shift not only adds one point to the Piotroski score but also signifies a favorable trend in IMAX's operational efficiency. This is particularly encouraging given the industry median ROA has consistently been high (ranging around 0.4033 to 0.4853 over the last 20 years). Moreover, IMAX's operating cash flow has illustrated resilience with generally positive figures, peaking as high as 109,972,000 in 2018. Therefore, this upswing is indeed good news for investors and attests to IMAX's enhanced asset management.

Operating Cashflow are higher than Netincome?

This criterion looks at the comparison of operating cash flow to net income. Positive operational cash flow higher than net income indicates quality earnings and better financial health.

In 2023, IMAX reported an operating cash flow of $58,615,000, which is considerably higher than the net income of $25,335,000. This is a positive sign as it indicates that the earnings are supported by cash, highlighting strong operational performance. For context, the last 20 years of operating cash flow versus net income reveal fluctuations but generally a pattern of managing operational cash. This year, the contrast is stark, contributing strongly to the robustness of financial health. Thus, IMAX earns 1 point for this criterion.

Liquidity of Imax (IMAX)

Leverage is declining?

Change in Leverage evaluates the company's use of debt over time, focusing on its potential risk and financial stability. Lower leverage indicates reduced risk and healthier balance sheets.

Between 2022 and 2023, IMAX's leverage increased from 0.2763 to 0.2813, indicating an escalation in the company's debt usage. This is flagged negatively in Piotroski Analysis, signaling potential increased financial risk. Such an increase implies IMAX took on more debt relative to its equity, thus scoring 0 points for this criterion in this year's analysis. Historically, IMAX had fluctuating leverage, with a notable increase starting around 2018. Given the historical context over the past 20 years, a rise in leverage is concerning because higher leverage can increase the likelihood of financial distress, especially in volatile industries like entertainment technology.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets.

The Current Ratio for IMAX increased from 1.8064 in 2022 to 1.9693 in 2023, indicating improvement. Historically, this stands well above the industry median of 1.0522 for 2023. A higher Current Ratio often implies better liquidity management, reducing financial risk, and enhancing investor confidence. With the improved ratio, IMAX shows resilience in short-term financial health compared to its peers.

Number of shares not diluted?

Change in shares outstanding is crucial as it indicates how much of the company's equity is diluted over time from activities like issuing shares.

For IMAX, the number of outstanding shares decreased from 56,674,000 in 2022 to 0 in 2023 according to the provided data. This significant decrease usually indicates actions like share buybacks or consolidation, but in this case, a drop to 0 could also indicate an error or non-reporting. For analytical purposes based on Piotroski criteria, we would typically add 1 point if shares decrease. But given the unusual number 0, an increase can be interpreted (typically, issuing more shares decreases a company's per-share earning potential, while reducing shares can indicate confidence and value in the business). Therefore, based on Piotroski’s point allocation for outstanding shares in IMAX, this criterion scores a 0 point in 2023, indicating possibly new issuances.

Operating of Imax (IMAX)

Cross Margin is growing?

Change in gross margin analyzes the profitability efficiency over time.

The gross margin for IMAX increased from 0.5198 in 2022 to 0.5718 in 2023, indicating a positive trend in profitability. This uplift adds 1 point in the Piotroski score. Historically, the company's gross margin has shown general resilience, notably surpassing the industry median on numerous occasions. For instance, in the volatile pandemic year of 2020, IMAX's gross margin was significantly better at 0.1572 despite a slump compared to the industry's 0.4318. This rising trend is a positive signal for the company, demonstrating increased operational efficiency and improving profit margins.

Asset Turnover Ratio is growing?

Asset turnover ratio indicates the efficiency of a company in using its assets to generate revenue.

The asset turnover ratio for Imax (IMAX) has increased from 0.353 in 2022 to 0.4583 in 2023. This increase is a positive sign as it demonstrates the company's improved efficiency in leveraging its assets to produce revenue, translating to higher productivity. Over the past 20 years, IMAX has seen significant fluctuations in this ratio. Notably, their highest asset turnover ratio was 0.8334 in 2010 and hit a low of 0.1452 in 2020. The current upward trend establishes a positive trajectory, reinforcing confidence in IMAX's operational management. Hence, a point is added to the Piotroski Score for the current year.