AT&T Inc. (T), IMAX Corporation (USA) (IMAX): Monday’s Top Upgrades (and Downgrades)

Well, consider: Right on the surface, IMAX Corporation (USA) (NYSE:IMAX) shares look pricey at a P/E ratio of 45. They look even pricier when you dig into the details and find that IMAX Corporation (USA) (NYSE:IMAX) generated only $28.3 million in real free cash flow last year — barely two-thirds of its reported “profit” of $41.7 million.

The resulting price-to-free cash flow ratio of nearly 65 is even more expensive than what we see at Liquidity Services. So even at a monster projected growth rate of nearly 33% annually over the next five years, IMAX Corporation (USA) (NYSE:IMAX) shares look quite risky. One hiccup in growth, one excuse to permit analysts to begin ratcheting their growth projections back to more realistic levels, and this stock could fall hard.

For now, the momentum is clearly on IMAX’s side. It’s the future I worry about.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends IMAX and Liquidity Services. The Motley Fool owns shares of IMAX.

The article Monday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.

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