The reason why Cineplex is climbing our rankings is because it looks cheap relative to current financials and estimates have yet to be updated. Unfortunately, it does not take into account the current quarter in which theatres and rec centres have all been shutdown. One the company reports over the next few quarters, estimates will be revised downward and I suspect its position will drop accordingly.
As for the Cineworld deal, it is anyone's guess. However, the market is definitely pricing in a no-deal. One of Cineworld's largest shareholders is fighting against it, as it is already significantly leveraged. The deal would compound Cineworld's debt issues. That being, Cineworld's management has re-iterated a few times that the deal is expected to proceed. Call me skeptical, but several other deals have already fallen through because of the current environment. It is likely this one will as well.
Further compounding the issue, no one knows just how big the impact will be on cinemas post-COVID19. Attendance was already stagnant and will people stop going to the movies? If the deal falls through, CGX's share price will certainly take some time to recover.
On a positive note, Cineplex has made significant progress diversifying away from theatre revenue and the Scene loyalty program is among the top loyalty programs in the country. It had a clear growth strategy, and one that seemed to be bearing fruit. If it doesn't get acquired, it is likely to continue down its path of diversification.
Mat