Cinemark Holdings, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Last week, you might have seen that Cinemark Holdings, Inc. (NYSE:CNK) released its annual result to the market. The early response was not positive, with shares down 9.5% to US$28.69 in the past week. Revenues were in line with forecasts, at US$3.3b, although statutory earnings per share came in 14% below what analysts expected, at US$1.63 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Cinemark Holdings after the latest results.

See our latest analysis for Cinemark Holdings

Following last week's earnings report, Cinemark Holdings's eleven analysts are forecasting 2020 revenues to be US$3.23b, approximately in line with the last 12 months. Statutory earnings per share are expected to climb 11% to US$1.81. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.27b and earnings per share (EPS) of US$2.02 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.

The consensus price target held steady at US$38.64, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Cinemark Holdings, with the most bullish analyst valuing it at US$49.00 and the most bearish at US$32.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cinemark Holdings shareholders.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Cinemark Holdings's performance in recent years. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.7% a significant reduction from annual growth of 4.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 10% annually for the foreseeable future. It's pretty clear that Cinemark Holdings's revenues are expected to perform substantially worse than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Cinemark Holdings's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$38.64, with the latest estimates not enough to have an impact on analysts' estimated valuations.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cinemark Holdings analysts - going out to 2023, and you can see them free on our platform here.

It might also be worth considering whether Cinemark Holdings's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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