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Is Cinemark (CNK) a Good Pick for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Cinemark Holdings, Inc. (CNK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Cinemark has a trailing twelve months PE ratio of 19.31, as you can see in the chart below:
This level compares only just favorably with the market at large, as the PE for the S&P 500 compares in at about 19.93. If we focus on the stock’s long-term PE trend, the current level puts Cinemark’s current PE ratio above its midpoint over the past five years, with the number having risen over the past few months.
Meanwhile, the stock’s PE compares favorably with the Zacks classified Leisure and Recreation Services industry’s trailing twelve months PE ratio, which stands at 19.78. At the very least, this indicates that the stock is somewhat undervalued right now, compared to its peers.
We should also point out that Cinemark has a forward PE ratio (price relative to this year’s earnings) of just 17.77, so it is fair to say that a slightly more value-oriented path may be ahead for Cinemark stock in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Cinemark has a P/S ratio of about 1.60. This is significantly lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Cinemark currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Cinemark a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Cinemark is just 1.39, a level that is lower than the industry average of 1.80. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, CNK is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Cinemark might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘F’. This gives CNK a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
However, the company operates in an industry that is currently performing well, being in the top 29%.
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to seven lower, while the full year estimate has seen four upward and two downward revisions in the same time period.
This has had a mixed impact on the consensus estimate though as the current quarter consensus estimate has fallen by 2.3% in the past two months, the full year estimate has remained stable. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Cinemark is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, despite a solid Industry Rank, a Zacks Rank #3, makes it hard to get too excited about this company overall. Over the past five years, the Zacks Leisure and Recreation Services industry has slightly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Cinemark (CNK) a Good Pick for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Cinemark Holdings, Inc. (CNK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Cinemark has a trailing twelve months PE ratio of 19.31, as you can see in the chart below:
This level compares only just favorably with the market at large, as the PE for the S&P 500 compares in at about 19.93. If we focus on the stock’s long-term PE trend, the current level puts Cinemark’s current PE ratio above its midpoint over the past five years, with the number having risen over the past few months.
Meanwhile, the stock’s PE compares favorably with the Zacks classified Leisure and Recreation Services industry’s trailing twelve months PE ratio, which stands at 19.78. At the very least, this indicates that the stock is somewhat undervalued right now, compared to its peers.
We should also point out that Cinemark has a forward PE ratio (price relative to this year’s earnings) of just 17.77, so it is fair to say that a slightly more value-oriented path may be ahead for Cinemark stock in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Cinemark has a P/S ratio of about 1.60. This is significantly lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Cinemark currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Cinemark a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Cinemark is just 1.39, a level that is lower than the industry average of 1.80. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, CNK is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Cinemark might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘F’. This gives CNK a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
However, the company operates in an industry that is currently performing well, being in the top 29%.
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to seven lower, while the full year estimate has seen four upward and two downward revisions in the same time period.
This has had a mixed impact on the consensus estimate though as the current quarter consensus estimate has fallen by 2.3% in the past two months, the full year estimate has remained stable. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Cinemark Holdings Inc Price and Consensus
Cinemark Holdings Inc Price and Consensus | Cinemark Holdings Inc Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Cinemark is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, despite a solid Industry Rank, a Zacks Rank #3, makes it hard to get too excited about this company overall. Over the past five years, the Zacks Leisure and Recreation Services industry has slightly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>