Forget IMAX Stock and Look at DIS Instead

IMAX (NYSE: IMAX) will find it hard to top 2025. During the year, the large-format movie theater technology company broke several of its records, including those for total box office take. This is impressive, but to me, Walt Disney (NYSE: DIS) has a better business model, a brighter future, and is the superior entertainment stock for investors.

Growing audiences

Nevertheless, of the two stocks, it's IMAX that is currently more favored by Mr. Market. It finished 2025 by reporting that a splashy new release, Avatar: Fire and Ash, clocked in at the company's fifth-best opening (in terms of ticket sales) in its history. It also happened to be the widest IMAX release ever, at 1,703 screens.

Image source: Getty Images.

Meanwhile, the company's fundamentals are heading in the right direction. Its third-quarter revenue set a new all-time record for that period, rising by a sturdy 17% to almost $107 million. Not to be outdone, net income not according to generally accepted accounting principles (GAAP) leaped by 39% to top $26 million. Both line items beat the consensus analyst estimates.

Next to a whirlwind like IMAX, Disney probably looks a little staid to some investors. It's also coming off a lean period where it didn't perform all that impressively.

There has been a rebound since. The company's streaming services, anchored by Disney+, finally achieved profitability in 2024. Zooming out, the top line is rising thanks to the contribution of the company's many revenue streams (theme parks, films, branded merchandise, etc.).

Disney published its fiscal 2025 results in November, revealing that revenue grew by 3% over the previous year to over $94 billion, as all three reporting segments (entertainment, sports, and experiences) posted increases. All managed to raise their operating income more robustly, resulting in an overall GAAP net profit surge of nearly 58% to $12 billion.

The future looks promising too, as Disney is guiding for the highest-revenue segment (entertainment) to improve its operating income at a double-digit percentage rate across fiscal 2026. That for sports and experiences should only gain in the single-digit percentages, but any level of growth is welcome.

A clear champion

To boil this down, Disney is a well-established entertainment giant with a great many intellectual property assets that have been monetized through its films, TV shows, theme park rides, merchandise, and other ventures. Its revenue sources are many and varied, and the bottom line has been well in the black of late.

Image source: Walt Disney.

While IMAX has, admirably, broadened its business beyond the multiplex, it's still susceptible to shifts in movie-going trends. It also doesn't have the size, scope, and reach of Disney.

Additionally, Disney is clearly the better buy on key valuation metrics. Given its massive collection of assets, it actually trades at a reasonable price-to-book ratio of 1.84, while its price-to-sales ratio on that towering pile of revenue is below 2.2; both compare very favorably to IMAX's 5.8 and 5.5, respectively. And on forward P/E, Disney also wins, at 17 versus 22.

I do like IMAX, as it's a well-managed company with a promising future. But it isn't Disney, the once and future king of many entertainment realms, and as such I'd unhesitatingly recommend buying the Mouse rather than the big-screen specialist.

Eric Volkman has positions in Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.