In recent years, the entertainment industry has faced a turbulent landscape shaped by the COVID-19 pandemic, the rise of dominant online streaming platforms, and the disruptive effects of the Hollywood strikes last year.
Nevertheless, despite these tumultuous times, global movie theater giant Cinemark Holdings, Inc. (CNK) has remained resilient, outpacing both the broader market and also its industry rival AMC Entertainment Holdings, Inc. (AMC). While AMC Entertainment grapples with challenges stemming from a waning meme stock craze, and has a consensus “Sell” rating from analysts, Cinemark, on the other hand, has a consensus “Buy” rating.
Plus, late last month, Cinemark snagged another fresh “Buy” rating from Roth Capital, supported by its strategic moves to rein in debt alongside a bullish outlook for the rebounding cinema landscape. As market watchers remain optimistic on Cinemark’s prospects, here’s a closer look at the stock.
About Cinemark Stock
Founded in 1984, Texas-based Cinemark Holdings, Inc. (CNK) is a global leader in the movie theater industry. Operating nearly 502 theaters with 5,708 screens across 42 U.S. states and 13 countries in South and Central America, Cinemark's portfolio includes brands like Century, Tinseltown, and Rave.
Known for delivering exceptional guest experiences, Cinemark offers the pioneering Movie Club subscription, lounger recliner seats, XD premium large-format screens, and a wide range of food and beverage options, ensuring every moviegoer enjoys a premium cinematic experience from start to finish.
Valued at $2.6 billion by market cap, shares of Cinemark have rallied 30.7% over the past 52 weeks, outpacing the broader S&P 500 Index’s ($SPX) 23% gains and AMC’s 87.9% plunge over the same period.
In 2024 alone, CNK stock is up 53.1%, easily overshadowing the SPX’s return of about 14.8% and AMC’s 12.9% decline on a YTD basis.
From a valuation standpoint, Cinemark stock is priced at 0.86 times sales, much lower than its industry peers and its own five-year average, respectively.
Cinemark’s Q1 Earnings Beat Projections
Cinemark lifted the curtains on its Q1 earnings results on May 2, which blew past Wall Street’s projections on both the top and bottom lines. Despite the challenges of strike-induced headwinds, Cinemark delighted 40 million moviegoers worldwide during the quarter and reported total revenue of $579.2 million, which topped estimates by 3.3%. Plus, EPS of $0.19 smashed forecasts for a per-share loss.
The company closed the quarter with a cash balance of $789 million, up from $650 million in the year-ago period. Additionally, on May 1, Cinemark executed a strategic move by redeeming the remaining $150 million of its COVID-related 8.8% senior secured notes a year ahead of schedule.
As of March 31, Cinemark's screen count stood at 5,708, with plans to unveil three new theaters and 33 screens in the next two years. During the Q1 earnings call, management revealed the company’s plans to deploy $150 million toward capital expenditures for fiscal 2024 to further enhance its facilities and offerings.
Analysts tracking Cinemark project the company’s profit to decline 20% to $1.07 per share in fiscal 2024, before recovering to jump 50.5% to $1.61 per share in fiscal 2025.
What Do Analysts Expect For Cinemark Holdings Stock?
Shares of the movie theater giant climbed 6.5% on June 24 following an upgrade to “Buy” at Roth, which also raised its price target to $26. Analyst Eric Handler cited “(1) meaningful box office improvement; (2) the company's debt reduction plans; and (3) a likely reintroduction of capital returns” as three key factors driving his positive outlook on CNK over the next several years.
"Furthermore, with the shares trading at less than 6x our 2025E EBITDA with a 10% FCF yield, valuation is very attractive," the analyst added.
Handler also highlighted a forthcoming "cyclical upturn" in the box office, fueled by major releases of some big "mega-franchises" in 2025 and 2026, and anticipated monthly revenue gains starting in September. Additionally, Cinemark’s debt reduction efforts are expected to lower net leverage below 2x next year, paving the way for potential dividends and share buybacks.
Overall, CNK stock has a consensus “Moderate Buy” rating. Of the 11 analysts covering the stock, six recommend a “Strong Buy,” one advises a “Moderate Buy,” three recommend a “Hold,” and the remaining one gives a “Strong Sell” rating.
Even though CNK is already trading above its average analyst price target of $20.82, the Street-high price target of $26 from Roth suggests that the stock could rally as much as 20.5% from its current levels.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
