June 21, 2023
9:24 am PT
Cinemark (CNK) is the 3rd largest cinema chain in the United States by screen count. The company which is based out of Plano, TX has been an underperforming stock for most of the last decade.
The stock has returned -41% over the last 10 years. In comparison, the S&P 500 index is up 350% during the same period so it's easy to see how long term investors of Cinemark have been frustrated. See chart below.
However, the frustration that they have felt during the last 10 years may have faded away a little this year as Cinemark is up nearly 90%.
The YTD performance is probably connected to a more positive outlook for the company. The company is seeing better financials and traffic in theaters compared to the last 3 years. Also, most analysts expect the traffic to continue to increase along with the revenue.
Does this mean that Cinemark has rebounded and is a good investment going forward? We have been a big proponent of the stock earlier this year as we saw upside of nearly 40% back in our March review of the company.
However, while we do see upside going forward we don't expect the same sort of returns in the next 12 months. The movie business is improving, but alot of the juice may have already been squeezed in the near term.
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