The share value of picture palace Cineworld fell back further from recent record highs in Thursday business in spite of the release of solid financials.

Still, I would expect Cineworld to sprint northwards again once current profit taking abates.

The cinema chain advised that group revenues soared 21.3% in the year up to May 11, or 15.8% at constant exchange rates. Cineworld witnessed ‘strong admissions growth’ both at home and abroad, it noted, and the company enjoyed ‘particularly good performances in the UK, Israel, Romania and Slovakia.’

Total box office revenues rose 15.9% at stable exchange rates, Cineworld said, with takings rising 17.3% in the UK and 13.6% in its overseas territories.

As a result Cineworld said that it remains ‘on track to deliver a performance for the year in line with current market expectations.’

A Blockbuster Result

Not surprisingly the steady slate of Hollywood blockbusters continued to attract moviegoers through Cineworld’s doors. Indeed, titles like Beauty and the Beast, Guardians of the Galaxy Vol. 2 and The Lego Batman Movie were amongst the highest grosser during the period, the movie mammoth announced.

And Cineworld has identified upcoming hits like Wonder Woman, Pirates of the Caribbean: Dead Men Tell No Tales and Transformers: The Last Knight as releases to keep an eye on in the months ahead.

Blockbusters like ‘Guardians of the Galaxy Vol. 2’ have helped to keep revenues firing at British cinema chain Cineworld. Photo: DANIEL LEAL-OLIVAS/AFP/Getty Images.

Expansion Scheme Firing

But Tinseltown’s carousel of crowdpleasers is not the only reason to expect sales to keep striding, with Cineworld continuing to aggressively expand across all of its territories.

The company affirmed its target to open 13 new multiplexes in the current year alone, following on from the opening of a six-screen site in Ely, Norfolk earlier this month. If realised, this would represent a meaty rise from the eight new sites opened in 2016.

Meanwhile Cineworld is also embarking on a major cinema refurbishment scheme in the UK and overseas, with four of its sites in the south of England currently receiving a fresh lick of paint.

Growth Star

For those seeking reliable earnings growth I believe Cineworld could be considered hard to beat.

The evergreen popularity of a trip to the movies has seen the chain serve up chunky double-digit profits rises for some years now. And this comes as no surprise given the broad demographic appeal, not to mention the relatively-inexpensive nature, of Cineworld’s services; as well as the public’s insatiable appetite for Hollywood’s packed roster of sequels and reboots.

Unsurpsingly the City does not expect Cineworld’s growth story to cease any time soon, with brokers expecting profits expansion of 7% and 8% in 2017 and 2018 respectively.

Whilst dealing on a slightly-expensive forward P/E ratio of 20 times, I reckon Cineworld’s exciting growth strategy and excellent earnings visibility merits this slightly-expensive valuation. Besides, a handy 2.9% dividend yield helps take some of the sting out of the chunky multiple.

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