Estimates have been rising for Cinemark Holdings, Inc. (CNK) thanks to strong first quarter earnings and a record-breaking opening for The Avengers movie.
It is a Zacks #2 Rank (Buy) stock.
Based on consensus estimates, analysts project solid double-digit earnings growth for Cinemark over the next two years. On top of this, the company pays a dividend that yields a solid 3.5%.
Cinemark Holdings operates 459 theatres with 5,181 screens in 39 U.S. states, Brazil, Mexico, Argentina and 10 other Latin American countries.
Cinemark Holdings is headquartered in Plano, Texas and has a market cap of $2.7 billion.
First Quarter Results
Cinemark Holdings reported strong first quarter results on May 7. Earnings per share came in at 37 cents, beating the Zacks Consensus Estimate by 3 cents. It was a stellar 68% increase over the same quarter last year.
Revenues rose 20% to $578.8 million, ahead of the Zacks Consensus Estimate of $569.0 million. Admissions revenues increased 20% while concessions rose 23%. Attendance was up 14% over the same quarter last year, thanks to a strong North American box office.
Meanwhile, operating income surged 84% as the company leveraged its fixed expenses.
Following strong first quarter results and the record breaking The Avengers openings in the U.S. and Latin America, analysts have revised their estimates higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).
Based on consensus estimates, analysts expect strong growth over the next couple of years. The 2012 Zacks Consensus Estimate is now $1.63, representing 33% growth over 2011 EPS. The 2013 consensus is currently $1.80, corresponding with 10% growth.
On top of strong growth, the company pays a dividend that yields a solid 3.5%.
Cinemark has paid the same 21 cent per share quarterly dividend since 2010. But if earnings continue to grow at a healthy clip, look for that dividend to rise in the future.
Valuation looks reasonable with shares trading at 14.4x 12-month forward earnings, in-line with its 10-year median. Its price to sales ratio of 1.2 is well below the industry median of 1.5.
The Bottom Line
With rising estimates, solid growth projections, a 3.5% yield and reasonable valuation, Cinemark Holdings offers attractive total return potential.
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