In light of major movie theater chain Cineworld Group PLC (LSE:CINE, Financial) announcing the closing of its U.S. and U.K. locations, four interactive media companies with high financial strength according to their cash-to-debt ratios are Autohome Inc. (ATHM, Financial), Gravity Co. Ltd. (GRVY, Financial), Sogou Inc. (SOGO, Financial) and Take-Two Interactive Software Inc. (TTWO, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.
Theater chain closes locations on rising coronavirus cases
On Monday, the U.K.-based theater chain said it will close this week its Regal theaters in the U.S. and Cineworld and Picturehouse theaters in the U.K. as studios remain reluctant to release new films during the coronavirus pandemic.
Covid-19 cases around the globe have exceeded 35.2 million, with over 7.41 million cases in the U.S. according to Johns Hopkins University statistics. Further, CNBC analysis of the data shows that 27 U.S. states have coronavirus cases increasing by at least 5% over a seven-day period, with noticeable increases in the West and the Midwest.
U.S. movie theater companies Cinemark Holdings Inc. (CNK, Financial) and AMC Entertainment Holdings (AMC, Financial) plunged approximately 16% and 10% on Cineworld's shutdown announcement. GuruFocus labels both companies as possible value traps based on its new, exclusive method that values stocks according to a stock's historical price multiples and the website's internal estimates of the stock's future growth.
New "green thumb's up" feature helps identify opportunities in interactive media
As consumers continue sheltering in place, people may switch to other forms of entertainment, including interactive media. According to the industry overview pages, the interactive media industry includes companies that offer online media, electronic gaming and multimedia services.
In September, GuruFocus started labeling on the Screener the filters that have a strong positive correlation between the filter's value and the stock's 12-month return. For example, the cash-to-debt ratio has a efficiency rank of 10, suggesting that stocks with higher cash-to-debt ratios generally have higher returns than do stocks with lower cash-to-debt ratios.
Among interactive media stocks, four stocks have high financial strength, high profitability and a cash-to-debt ratio of at least 10.
Autohome delivers comprehensive, independent and interactive content to automobile buyers and owners. GuruFocus ranks the Chinese company's financial strength 10 out of 10 on several positive investing signs, which include no long-term debt and a double-digit Altman Z-score.
Gravity develops and publishes a wide range of online and mobile games, including "Ragnarok Online," "Requiem" and "Dragonica." GuruFocus ranks the South Korean company's financial strength 9 out of 10, driven on a strong Altman Z-score of 11.
Sogou operates Chinese language software that captures Chinese expressions and phrases from the internet and builds a comprehensive, up-to-date vocabulary library. GuruFocus ranks the company's financial strength 10 out of 10 on several positive investing signs, which include no long-term debt and a high Altman Z-score of 5.
Take-Two develops and publishes video games like "Grand Theft Auto" and "NBA 2K." GuruFocus ranks the New York-based company's financial strength 7 out of 10 on several positive investing signs, which include a high Altman Z-score of 5.67 and debt ratios that are outperforming over 65% of global competitors.
Disclosure: The author has no positions in the stocks mentioned. The correlation research only gives a rough understanding of how the filters were correlated with stock returns over a specific period. Past performance does not indicate future performance and thus should be used with caution.
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