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Those who invested in IMAX (NYSE:IMAX) three years ago are up 52%

One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. For example, IMAX Corporation (NYSE:IMAX) shareholders have seen the share price rise 52% over three years, well in excess of the market return (37%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 21%.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for IMAX

Because IMAX made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

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IMAX's revenue trended up 12% each year over three years. That's pretty nice growth. While the share price has done well, compounding at 15% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Of course, it's always worth considering funding risks when a company isn't profitable.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

IMAX is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for IMAX in this interactive graph of future profit estimates.

A Different Perspective

It's good to see that IMAX has rewarded shareholders with a total shareholder return of 21% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 2% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand IMAX better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for IMAX you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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