Movie theater chain Cinemark (CNK) has announced it broke several domestic records during Thanksgiving, spurred by diverse movie selections playing in its technologically advanced and comfortable theaters. This impressive performance helped to drive revenue that beat expectations in Q3. Investors have taken notice of Cinemark’s robust recovery from the pandemic, driving up the shares roughly 124% year-to-date. Analysts anticipate continuous growth driven by the upcoming release of highly anticipated films in 2025 and beyond.
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Cinemark Breaking Records
Cinemark is a leading global theatrical exhibition company, operating approximately 500 theaters in 42 U.S. states and 13 South and Central American countries. It offers advanced sight and sound technology, including its own Cinemark XD and Barco laser projection. Along with superior technology, Cinemark boasts upscale amenities like expanded food and beverage offerings, Luxury Lounger recliners, and D-BOX motion seats.
The company has announced a successful surpassing all-time domestic records across various areas, bolstered by the Thanksgiving holiday period. These records include the highest five-day and Thanksgiving Day box office takings, the most single-day attendees in the post-pandemic era on Friday, November 29, and the highest single-day food and beverage revenue on the same day. This success was driven by attendance to popular films such as Moana 2, Wicked, Gladiator II, and Red One. The Thanksgiving holiday also saw Cinemark record the top-grossing November premium format weekend of all time, and the company achieved its second-best November box office ever.
The company anticipates upcoming releases hitting the big screen in the coming weeks and throughout the next year. For example, Kraven the Hunter, Mufasa: The Lion King, and Sonic the Hedgehog 3 will likely keep attendance at higher levels.
Box Office Heating Up
The company recently reported results for Q3 of 2024. Revenue of $921.8 million beat analysts’ expectations while marking a 5.4% year-over-year increase. This rise in revenue is attributed to a 3.7% increase in admissions revenue to $460.4 million and an 8.1% increase in concession revenue to $367.3 million. The worldwide average ticket price was $7.62, while the concession revenue per patron was $6.08.
Net income stood at $187.8 million, a significant increase from the $90.2 million earned during the same period last year. Diluted earnings per share (EPS) also increased to $1.19, beating consensus expectations of $0.58.
The company reported generating $107 million in cash from operating activities and $64 million of free cash flow. It ended the quarter with a substantial cash balance of $928 million.
Cinemark Is Trending Upward
Cinemark has successfully rebounded from the COVID-related downturn that ravaged the theater industry. Its shares are up 93% over the past three years, and it trades near the high end of its 52-week price range of $13.19 – $36.28. It appears fairly valued with its P/S ratio of 1.31x, which is in line with the Communications Services sector average of 1.29x.
Analysts following the company have mostly been constructive on CNK stock. For example, Benchmark’s Mike Hickey, a four-star analyst according to Tipranks’ ratings, recently raised the price target on the shares to $40 while maintaining a Buy rating. He noted that the domestic box office has surpassed expectations, and he anticipates this momentum will persist with the films set to release in 2025 and beyond.
Cinemark Holdings is rated a Moderate Buy overall, based on the recent recommendations of 10 analysts. Their average price target for CNK stock is $32.89, representing a potential 3.07% upside from current levels.
View From the Cheap Seats
Cinemark is seeing a strong rebound from the pandemic-driven lows. The company marked significant records this Thanksgiving holiday, driven by a diverse roster of popular films and advanced in-theater technology. The shares are significantly up year-to-date, and there is anticipation that growth momentum will continue as the firm anticipates a series of anticipated film releases in 2025 and beyond. The theater industry is a tough sell for most investors, but Cinemark has separated itself as the “best house on a run-down street.”
