Cinemark Holdings - Growth & Income

Zacks Investment Research
Posted: Dec 07, 2012 12:00 AM
Cinemark Holdings Inc. (CNK) reported solid third quarter results early last month as this motion picture exhibitor had a company record for worldwide attendance. The Zacks #2 Rank (Buy) has seen nearly every analyst revise estimates higher in the past 30 days, as shares trade near its 52-week high of $27.50. Furthermore, the company offers a dividend yield of 3.2%.

Strong Third Quarter

Cinemark Holdings reported strong third quarter results on November 6 as attendance reached 69.7 million patrons. Earnings of 41 cents per share exceeded the Zacks Consensus Estimate by 17.1%.

Total revenues were $633.6 million, which topped the Zacks Consensus Estimate of $630 million. Admissions revenue was $402.4 million and concession revenue was $200.1 million. Adjusted EBITDA stood at $148.4 million.

Surge in Earnings Estimate Revisions

Over the past 30 days, the Zacks Consensus Estimate for 2012 increased 5.3% to $1.59, as 12 of 13 earnings estimates moved higher. This implies a year-over-year growth of 29.5%. For 2013, the Zacks Consensus Estimate is up 6.3% to $1.85 over the same period, as 11 of 13 earnings estimates moved upward. This represents growth of 16.2%.

Dividend Payout

Cinemark Holdings paid a dividend of 21 cents per share in the third quarter of 2012. The company has maintained a steady dividend payout over the past several quarters since November 2010. The current dividend payment affirms a yield of 3.2%.

Attractive Valuation

Shares of Cinemark Holdings look attractive on a price-to-earnings (P/E) and price-to-sales (P/S) basis. It currently trades at a forward P/E of 16.60x versus the peer group average of 17.14x. On a P/S basis, shares trade at 1.27x versus 1.35x for the peer group average. Its PEG ratio is 1.09, based on a 5-year EPS growth rate of 15.2%.

Since February 13, 2012, Cinemark shares have consistently fared better than the simple moving average for 200 days or SMA (200). The year-to-date return for the stock is 47.8%, compared to the S&P 500 tally of 10.4%.

The Bottom Line

With rising earnings estimates, robust growth projections and a decent dividend yield, Cinemark Holdings offers an enticing upside potential going forward. In addition, a geographic diversity with strong U.S. and Latin American footprints bodes well for its long-term growth.

Cinemark Holdings Inc. is a leader in the motion picture exhibition industry, operating 461 theatres with 5,207 screens in 39 U.S. states, as well as in Brazil, Mexico, Argentina and 10 other Latin American countries. The company currently has a market cap of $3.1 billion.

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CINEMARK HLDGS (CNK): Free Stock Analysis Report
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