Record after record, yet the market still underestimates the company
Some companies don't hold their fate in their own hands. For a cinema operator, Hollywood sits behind the wheel. Even the nicest cinema will stay empty if studios fail to deliver films people want to see. And when a strong season arrives, box offices fill up and profit soars. This very dependence makes cinemas a highly volatile business, where ordinary numbers often mislead and everything is a matter of proper timing.
Key points
The company just had its best quarter since 2019: revenue rose 12.5% and net profit more than doubled.
It operates the fourth-largest cinema chain in the US along with a portfolio of luxury hotels. Two industries in one family business.
It owns most of its real estate, whose market value is likely far above book value. That is a hidden reserve.
A price-to-earnings ratio of 40 looks high, but it is misleading due to the huge sensitivity of cinemas to the film calendar.
The second half of the year promises strong films like Avengers, Dune 3, and Spider-Man, which should drive attendance and profit.
The company in question, however, is much more than just a cinema operator. It is a family business with a ninety-year history that, alongside one of the country's largest cinema chains, also operates a portfolio of luxury hotels. And above all, it sits on valuable real estate that it owns. This combination—two different industries under one roof plus tangible assets in the background—makes it a more interesting and resilient story than you would expect from a cinema owner.
And right now it is doing excellently. It just had its best quarter since 2019, when both divisions were firing on all cylinders: cinemas benefited from a strong film slate, hotels from record demand. The market appreciated it and the stock climbed to annual highs. The question remains whether this is the start of a lasting recovery or just a flash driven by a coincidentally good season, followed by another slump.
That the company is enjoying good times is obvious from the numbers. More interesting is something else: is the recovery sustainable? How big is the hidden value in real estate? And how seriously should we take the long-term threat of streaming? Above all, does today's price correctly account for all this? The answer, along with a detailed analysis, valuation, and scenarios, is discussed in the paid section.