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Cinemark Holdings Inc (CNK) Hit a 52 Week High, Can the Run Continue?

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Have you been paying attention to shares of Cinemark Holdings (CNK - Free Report) ? Shares have been on the move with the stock up 17.5% over the past month. The stock hit a new 52-week high of $33.45 in the previous session. Cinemark Holdings has gained 137.4% since the start of the year compared to the 11.7% move for the Zacks Consumer Discretionary sector and the 18.4% return for the Zacks Leisure and Recreation Services industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 31, 2024, Cinemark reported EPS of $1.19 versus consensus estimate of $0.58 while it beat the consensus revenue estimate by 3.37%.

For the current fiscal year, Cinemark is expected to post earnings of $2 per share on $3.03 billion in revenues. This represents a 49.25% change in EPS on a -1.24% change in revenues. For the next fiscal year, the company is expected to earn $1.97 per share on $3.36 billion in revenues. This represents a year-over-year change of -1.09% and 10.95%, respectively.

Valuation Metrics

Cinemark may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Cinemark has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 16.8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 20.9X. On a trailing cash flow basis, the stock currently trades at 11X versus its peer group's average of 11.1X. Additionally, the stock has a PEG ratio of 1.68. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Cinemark currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cinemark fits the bill. Thus, it seems as though Cinemark shares could have potential in the weeks and months to come.

How Does CNK Stack Up to the Competition?

Shares of CNK have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Carnival Corporation (CCL - Free Report) . CCL has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.

Earnings were strong last quarter. Carnival Corporation beat our consensus estimate by 8.55%, and for the current fiscal year, CCL is expected to post earnings of $1.66 per share on revenue of $25.19 billion.

Shares of Carnival Corporation have gained 17.2% over the past month, and currently trade at a forward P/E of 18.92X and a P/CF of 11.11X.

The Leisure and Recreation Services industry is in the top 9% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CNK and CCL, even beyond their own solid fundamental situation.


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