Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Cineplex Inc. operates 161 movie theatres with 1,635 screens across Canada. It also allows users to rent or buy videos online. Its market cap is $2.6-billion.
The company has grown EPS at a 26.7-per-cent pace over the long term (using an average of the 3-, 4-, and 5-year EPS growth rates).
Cineplex may look pricey, at 27.4 times trailing 12-month EPS, but thanks to its strong growth and 3.4-per-cent dividend yield, it has a solid yield-adjusted P/E-to-growth ratio of 0.91, part of why the Peter Lynch-based model thinks it's still a good value.
Its debt/equity ratio is a reasonable 28.8 per cent, less than half the 64.2-per-cent industry average, which the Lynch- and Martin Zweig-based models like.
Cineplex has solid 13-per-cent return on equity. Its relative strength of 78 over past 12 months shows good momentum. And it has a 43.8-per-cent return on capital, which ranks 40th in the Canadian market, which the Joel Greenblatt-based model likes.
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