Cinemark Holdings, Inc. – Value Analysis (NYSE:CNK) : November 6, 2017

Capitalcube gives Cinemark Holdings, Inc. a score of 59.

Our analysis is based on comparing Cinemark Holdings, Inc. with the following peers – Regal Entertainment Group Class A, Marcus Corporation, AMC Entertainment Holdings, Inc. Class A and Reading International, Inc. Class A (RGC-US, MCS-US, AMC-US and RDI-US).

Investment Outlook

Cinemark Holdings, Inc. has a fundamental score of 59 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Taking peer performance into consideration, relative performance over the last month and last year is around the peer median.
  • It currently trades at a Price/Book ratio of (2.96).
  • CNK-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • CNK-US has relatively high profit margins while operating with median asset turns.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • Over the last five years, CNK-US‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • CNK-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • CNK-US seems to be constrained by the current level of debt.

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Leverage & Liquidity

CNK-US is debt-constrained.

  • With debt at a relatively high 34.34% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 34.34%), and interest coverage level of 3.95x, CNK-US seems debt-constrained.
  • All 4 peers for the company have an outstanding debt balance.

CNK-US has maintained its Some Capacity profile from the recent year-end.

  • CNK-US‘s interest coverage is similar to last year’s high of 4.12x, which compares to a low of 3.22x in 2014.
  • Though its interest coverage has remained relatively stable at 3.95x compared to 2016, its peer median has increased to 3.54x from 2.92x during this period.
  • Interest coverage fell 0.79 points relative to peers.
  • CNK-US‘s debt-EV is similar to last year’s low of 34.34%, which compares to the 2012 high of 45.92%.
  • Compared to 2016, debt-EV has remained relatively stable for both the company (34.34%) and the peer median (34.34%).

Access the detailed analysis for Cinemark Holdings, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Regal Entertainment Group Class A 43.68 0.88 2.3 20.53
Marcus Corporation 27.38 0.47 6.41 31.11
AMC Entertainment Holdings, Inc. Class A 63.45 0.54 1.24 10.45
Reading International, Inc. Class A 27.32 0.89 3.54 16.85
Cinemark Holdings, Inc. 34.34 1.5 3.95 23.93
Peer Median 34.34 0.88 3.54 20.53
Best In Class 27.32 1.5 6.41 31.11

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Company Profile

Cinemark Holdings, Inc. is a holding company which, operates through its subsidiaries in the motion picture exhibition industry. The company operates its multiplex theaters in smaller cities and suburban areas of major metropolitan markets. It operates through the following segments: International Markets and U.S. Markets. The International Markets segment consists of operations in Brazil, Mexico, Chile, Colombia, Argentina, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The U.S. Markets segment includes U.S. and Canada operations. It has introduced NextGen concept, which features wall-to-wall and ceiling-to-floor screens and the latest digital projection and sound technologies in all of the auditoriums of a complex. These theatres generally also have an XD auditorium. The company was founded by Lee Roy Mitchell in 1984 and is headquartered in Plano, TX.

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