IMAX (IMAX): Buy, Sell, or Hold Post Q2 Earnings?

August 04, 2025 at 00:01 AM EDT

IMAX Cover Image

Since February 2025, IMAX has been in a holding pattern, posting a small return of 2.6% while floating around $25.

Is now the time to buy IMAX? Find out in our full research report, it’s free.

Why Does IMAX Stock Spark Debate?

Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.

Two Things to Like:

1. Increasing Free Cash Flow Margin Juices Financials

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, IMAX’s margin expanded by 26.4 percentage points over the last five years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality. IMAX’s free cash flow margin for the trailing 12 months was 8.1%.

IMAX Trailing 12-Month Free Cash Flow Margin

2. New Investments Bear Fruit as ROIC Jumps

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, IMAX’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

IMAX Trailing 12-Month Return On Invested Capital

One Reason to be Careful:

Lackluster Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within business services, a stretched historical view may miss recent innovations or disruptive industry trends. IMAX’s recent performance shows its demand has slowed as its annualized revenue growth of 1.5% over the last two years was below its five-year trend. IMAX Year-On-Year Revenue Growth

Final Judgment

IMAX has huge potential even though it has some open questions, but at $25 per share (or 19.6× forward P/E), is now the time to initiate a position? See for yourself in our full research report, it’s free.

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