Why Savvy Investors Should Pivot from IMAX to Disney: A Valuation Wake-Up Call

The Case for Looking Beyond the Latest Box Office Darling

IMAX has certainly grabbed headlines with its 2025 performance. The large-format cinema specialist achieved impressive milestones, including record quarterly revenue of nearly $107 million (a 17% jump) and net income soaring 39% to exceed $26 million. Avatar: Fire and Ash marked the company’s fifth-best opening ever, distributed across a record-wide 1,703 screens. On the surface, these numbers paint a compelling picture of momentum.

But here’s where investors need to pump the brakes: stellar single-year performance doesn’t automatically translate into the best long-term investment. And when you place IMAX side-by-side with Walt Disney, a very different story emerges.

The Disney Advantage: Scale, Diversification, and Real Profitability

While IMAX dominates the specialty theater conversation, Disney operates an entirely different league. The entertainment behemoth reported fiscal 2025 revenue exceeding $94 billion, up 3% year-over-year, with profits that dwarf the industry conversation. Most significantly, GAAP net income surged nearly 58% to $12 billion—a figure that makes IMAX’s solid earnings look modest by comparison.

What separates Disney isn’t just size; it’s business model architecture. IMAX remains vulnerable to cinema attendance trends and blockbuster release schedules. Disney, by contrast, generates revenue through theme parks, theatrical releases, broadcast and streaming services, consumer products, and licensing. This portfolio approach means the company weathered streaming losses in 2024 and emerged profitable in 2025 with Disney+ finally turning black. The streaming division’s turnaround, combined with growth across entertainment, sports, and experiences segments—each posting double-digit operating income growth—demonstrates sustainable expansion.

The Valuation Disconnect

Perhaps most revealing is the valuation gap. Consider the metrics head-to-head:

• Price-to-book ratio: Disney trades at 1.84 instead of IMAX’s 5.8
• Price-to-sales ratio: Disney at below 2.2 versus IMAX’s 5.5
• Forward P/E: Disney at 17 versus IMAX’s 22

These aren’t marginal differences. Disney’s lower multiples reflect a market acknowledging both its maturity and stability, while IMAX commands a premium that assumes extraordinary growth sustainability. For a company dependent on theatrical trends, that valuation premium warrants skepticism.

Looking Ahead: Guided Growth vs. Cyclical Exposure

Disney projects its largest segment (entertainment) will expand operating income at double-digit rates through fiscal 2026, with sports and experiences contributing single-digit growth. These aren’t aggressive forecasts; they’re conservative guidance from a company with predictable cash flows and diversified monetization pathways.

IMAX, conversely, must navigate unpredictable theatrical release calendars and shifting consumer viewing preferences. The company’s broadened business model—beyond traditional multiplex partnerships—shows strategic evolution, but it lacks Disney’s fortress-like revenue stability.

The Bottom Line: Momentum Vs. Moat

IMAX deserves credit for execution and growth trajectory. It’s professionally managed with real operational momentum. However, choosing IMAX instead of Disney is essentially betting that short-term cinema trends trump long-term business fundamentals. Disney possesses a genuine competitive moat built through decades of IP development, theme park dominance, and now-profitable streaming infrastructure.

On valuation metrics, fundamental diversification, and forward guidance, Disney presents the more compelling case. The choice becomes clearer when you step back from headline-grabbing box office records and examine the underlying economics: Disney offers better positioning for the next decade, even if it doesn’t command the same immediate attention.

For investors weighing these two entertainment stocks, the smarter move isn’t following the momentum trap—it’s recognizing that proven, diversified assets trading at reasonable multiples typically outperform hot single-business narratives over the long horizon.