Intrinsic value of Cinemark Holdings Inc - CNK

Previous Close

$39.84

  Intrinsic Value

$35.52

stock screener

  Rating & Target

hold

-11%

Previous close

$39.84

 
Intrinsic value

$35.52

 
Up/down potential

-11%

 
Rating

hold

We calculate the intrinsic value of CNK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
Revenue, $m
  3,431
  3,649
  3,876
  4,112
  4,358
  4,615
  4,882
  5,162
  5,453
  5,757
  6,075
  6,408
  6,755
  7,119
  7,499
  7,897
  8,314
  8,751
  9,208
  9,687
  10,189
  10,715
  11,267
  11,845
  12,451
  13,087
  13,754
  14,454
  15,188
  15,958
Variable operating expenses, $m
  2,971
  3,150
  3,336
  3,529
  3,731
  3,941
  4,160
  4,389
  4,627
  4,877
  4,976
  5,249
  5,533
  5,831
  6,143
  6,469
  6,810
  7,168
  7,542
  7,935
  8,346
  8,777
  9,229
  9,702
  10,199
  10,720
  11,267
  11,840
  12,441
  13,072
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,971
  3,150
  3,336
  3,529
  3,731
  3,941
  4,160
  4,389
  4,627
  4,877
  4,976
  5,249
  5,533
  5,831
  6,143
  6,469
  6,810
  7,168
  7,542
  7,935
  8,346
  8,777
  9,229
  9,702
  10,199
  10,720
  11,267
  11,840
  12,441
  13,072
Operating income, $m
  460
  499
  540
  583
  628
  674
  722
  773
  826
  881
  1,099
  1,159
  1,222
  1,288
  1,356
  1,428
  1,504
  1,583
  1,665
  1,752
  1,843
  1,938
  2,038
  2,142
  2,252
  2,367
  2,488
  2,614
  2,747
  2,886
EBITDA, $m
  830
  883
  938
  995
  1,055
  1,117
  1,182
  1,249
  1,320
  1,393
  1,470
  1,551
  1,635
  1,723
  1,815
  1,911
  2,012
  2,118
  2,228
  2,344
  2,466
  2,593
  2,726
  2,866
  3,013
  3,167
  3,328
  3,498
  3,675
  3,862
Interest expense (income), $m
  108
  129
  141
  154
  167
  181
  196
  211
  227
  244
  261
  279
  298
  318
  338
  360
  383
  406
  431
  457
  484
  513
  542
  574
  606
  641
  677
  715
  754
  796
  839
Earnings before tax, $m
  331
  358
  386
  416
  446
  478
  511
  546
  582
  620
  820
  861
  904
  949
  996
  1,046
  1,098
  1,152
  1,208
  1,268
  1,330
  1,396
  1,464
  1,536
  1,611
  1,690
  1,773
  1,860
  1,951
  2,047
Tax expense, $m
  89
  97
  104
  112
  120
  129
  138
  147
  157
  167
  221
  232
  244
  256
  269
  282
  296
  311
  326
  342
  359
  377
  395
  415
  435
  456
  479
  502
  527
  553
Net income, $m
  242
  262
  282
  303
  326
  349
  373
  398
  425
  452
  598
  628
  660
  693
  727
  763
  801
  841
  882
  926
  971
  1,019
  1,069
  1,121
  1,176
  1,234
  1,294
  1,358
  1,424
  1,494

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,773
  5,076
  5,391
  5,720
  6,062
  6,419
  6,791
  7,179
  7,584
  8,007
  8,450
  8,912
  9,395
  9,901
  10,430
  10,984
  11,563
  12,170
  12,806
  13,473
  14,171
  14,903
  15,670
  16,474
  17,318
  18,202
  19,130
  20,103
  21,124
  22,195
Adjusted assets (=assets-cash), $m
  4,773
  5,076
  5,391
  5,720
  6,062
  6,419
  6,791
  7,179
  7,584
  8,007
  8,450
  8,912
  9,395
  9,901
  10,430
  10,984
  11,563
  12,170
  12,806
  13,473
  14,171
  14,903
  15,670
  16,474
  17,318
  18,202
  19,130
  20,103
  21,124
  22,195
Revenue / Adjusted assets
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
Average production assets, $m
  2,810
  2,989
  3,175
  3,368
  3,570
  3,780
  3,999
  4,227
  4,466
  4,715
  4,976
  5,248
  5,533
  5,830
  6,142
  6,468
  6,809
  7,167
  7,541
  7,934
  8,345
  8,776
  9,227
  9,701
  10,198
  10,718
  11,265
  11,838
  12,439
  13,070
Working capital, $m
  -326
  -347
  -368
  -391
  -414
  -438
  -464
  -490
  -518
  -547
  -577
  -609
  -642
  -676
  -712
  -750
  -790
  -831
  -875
  -920
  -968
  -1,018
  -1,070
  -1,125
  -1,183
  -1,243
  -1,307
  -1,373
  -1,443
  -1,516
Total debt, $m
  2,238
  2,443
  2,657
  2,880
  3,112
  3,354
  3,606
  3,869
  4,144
  4,431
  4,731
  5,044
  5,372
  5,715
  6,074
  6,449
  6,842
  7,254
  7,685
  8,137
  8,610
  9,106
  9,626
  10,172
  10,743
  11,343
  11,972
  12,632
  13,324
  14,050
Total liabilities, $m
  3,236
  3,441
  3,655
  3,878
  4,110
  4,352
  4,604
  4,867
  5,142
  5,429
  5,729
  6,042
  6,370
  6,713
  7,072
  7,447
  7,840
  8,252
  8,683
  9,134
  9,608
  10,104
  10,624
  11,169
  11,741
  12,341
  12,970
  13,630
  14,322
  15,048
Total equity, $m
  1,537
  1,634
  1,736
  1,842
  1,952
  2,067
  2,187
  2,312
  2,442
  2,578
  2,721
  2,870
  3,025
  3,188
  3,358
  3,537
  3,723
  3,919
  4,124
  4,338
  4,563
  4,799
  5,046
  5,305
  5,576
  5,861
  6,160
  6,473
  6,802
  7,147
Total liabilities and equity, $m
  4,773
  5,075
  5,391
  5,720
  6,062
  6,419
  6,791
  7,179
  7,584
  8,007
  8,450
  8,912
  9,395
  9,901
  10,430
  10,984
  11,563
  12,171
  12,807
  13,472
  14,171
  14,903
  15,670
  16,474
  17,317
  18,202
  19,130
  20,103
  21,124
  22,195
Debt-to-equity ratio
  1.460
  1.490
  1.530
  1.560
  1.590
  1.620
  1.650
  1.670
  1.700
  1.720
  1.740
  1.760
  1.780
  1.790
  1.810
  1.820
  1.840
  1.850
  1.860
  1.880
  1.890
  1.900
  1.910
  1.920
  1.930
  1.940
  1.940
  1.950
  1.960
  1.970
Adjusted equity ratio
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  242
  262
  282
  303
  326
  349
  373
  398
  425
  452
  598
  628
  660
  693
  727
  763
  801
  841
  882
  926
  971
  1,019
  1,069
  1,121
  1,176
  1,234
  1,294
  1,358
  1,424
  1,494
Depreciation, amort., depletion, $m
  370
  384
  398
  412
  427
  443
  459
  476
  494
  513
  371
  392
  413
  435
  458
  483
  508
  535
  563
  592
  623
  655
  689
  724
  761
  800
  841
  883
  928
  975
Funds from operations, $m
  612
  645
  680
  716
  753
  792
  832
  875
  919
  965
  970
  1,020
  1,073
  1,128
  1,186
  1,246
  1,309
  1,376
  1,445
  1,518
  1,594
  1,674
  1,757
  1,845
  1,937
  2,034
  2,135
  2,241
  2,353
  2,470
Change in working capital, $m
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -46
  -48
  -50
  -52
  -55
  -58
  -60
  -63
  -66
  -70
  -73
Cash from operations, $m
  632
  666
  701
  738
  776
  816
  858
  901
  946
  994
  1,000
  1,052
  1,106
  1,163
  1,222
  1,284
  1,349
  1,417
  1,488
  1,563
  1,642
  1,724
  1,810
  1,900
  1,995
  2,094
  2,198
  2,308
  2,423
  2,543
Maintenance CAPEX, $m
  -197
  -210
  -223
  -237
  -251
  -266
  -282
  -298
  -315
  -333
  -352
  -371
  -392
  -413
  -435
  -458
  -483
  -508
  -535
  -563
  -592
  -623
  -655
  -689
  -724
  -761
  -800
  -841
  -883
  -928
New CAPEX, $m
  -173
  -178
  -186
  -193
  -202
  -210
  -219
  -229
  -239
  -249
  -260
  -272
  -285
  -298
  -312
  -326
  -341
  -357
  -374
  -392
  -411
  -431
  -452
  -474
  -497
  -521
  -546
  -573
  -601
  -631
Cash from investing activities, $m
  -370
  -388
  -409
  -430
  -453
  -476
  -501
  -527
  -554
  -582
  -612
  -643
  -677
  -711
  -747
  -784
  -824
  -865
  -909
  -955
  -1,003
  -1,054
  -1,107
  -1,163
  -1,221
  -1,282
  -1,346
  -1,414
  -1,484
  -1,559
Free cash flow, $m
  263
  278
  292
  308
  323
  340
  356
  374
  392
  411
  388
  408
  430
  452
  475
  500
  525
  551
  579
  608
  638
  670
  703
  738
  774
  812
  852
  894
  938
  984
Issuance/(repayment) of debt, $m
  198
  205
  214
  223
  232
  242
  252
  263
  275
  287
  300
  313
  328
  343
  359
  375
  393
  412
  431
  452
  473
  496
  520
  545
  572
  600
  629
  660
  692
  726
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  198
  205
  214
  223
  232
  242
  252
  263
  275
  287
  300
  313
  328
  343
  359
  375
  393
  412
  431
  452
  473
  496
  520
  545
  572
  600
  629
  660
  692
  726
Total cash flow (excl. dividends), $m
  460
  483
  506
  530
  555
  581
  609
  637
  667
  698
  687
  722
  757
  795
  834
  875
  918
  963
  1,010
  1,060
  1,112
  1,166
  1,223
  1,283
  1,346
  1,412
  1,481
  1,554
  1,630
  1,710
Retained Cash Flow (-), $m
  -93
  -98
  -102
  -106
  -110
  -115
  -120
  -125
  -131
  -136
  -142
  -149
  -156
  -163
  -170
  -178
  -187
  -195
  -205
  -215
  -225
  -236
  -247
  -259
  -272
  -285
  -299
  -313
  -329
  -345
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  367
  386
  405
  425
  445
  467
  489
  512
  537
  562
  545
  573
  602
  632
  664
  697
  731
  768
  805
  845
  887
  931
  976
  1,024
  1,075
  1,127
  1,183
  1,241
  1,301
  1,365
Discount rate, %
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
  346
  339
  331
  320
  308
  293
  277
  260
  241
  221
  186
  168
  149
  131
  114
  97
  82
  68
  55
  44
  35
  27
  20
  15
  11
  7
  5
  3
  2
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Cinemark Holdings, Inc. is engaged in the motion picture exhibition business with theatres in the United States (U.S.), Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Paraguay, Curacao and Bolivia. The Company manages its business in two segments: U.S. markets and international markets. The international segment consists of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. As of December 31, 2016, the Company operated 526 theatres and 5,903 screens in the United States and Latin America. As of December 31, 2016, its the United States circuit had 339 theatres and 4,559 screens in 41 states and its international circuit had 187 theatres and 1,344 screens in 15 countries. It develops new platforms for its theatre circuit, such as XD, Cinemark Reserve, Luxury Lounger reclining seats, CineArts and other concepts.

FINANCIAL RATIOS  of  Cinemark Holdings Inc (CNK)

Valuation Ratios
P/E Ratio 18.2
Price to Sales 1.6
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow 37
Growth Rates
Sales Growth Rate 2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.5%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio 21
Current Ratio 0
LT Debt to Equity 159.8%
Total Debt to Equity 162%
Interest Coverage 4
Management Effectiveness
Return On Assets 7.9%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 8%
Ret/ On T. Cap. - 3 Yr. Avg. 7%
Return On Equity 21.6%
Return On Equity - 3 Yr. Avg. 19.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 49.5%
Gross Margin - 3 Yr. Avg. 49.5%
EBITDA Margin 23.2%
EBITDA Margin - 3 Yr. Avg. 22.7%
Operating Margin 14%
Oper. Margin - 3 Yr. Avg. 14.2%
Pre-Tax Margin 12.4%
Pre-Tax Margin - 3 Yr. Avg. 11.9%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 7.9%
Effective Tax Rate 28.8%
Eff/ Tax Rate - 3 Yr. Avg. 33%
Payout Ratio 49%

CNK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNK stock intrinsic value calculation we used $3222 million for the last fiscal year's total revenue generated by Cinemark Holdings Inc. The default revenue input number comes from 0001 income statement of Cinemark Holdings Inc. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CNK stock valuation model: a) initial revenue growth rate of 6.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.3%, whose default value for CNK is calculated based on our internal credit rating of Cinemark Holdings Inc, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cinemark Holdings Inc.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CNK stock the variable cost ratio is equal to 86.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CNK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.3% for Cinemark Holdings Inc.

Corporate tax rate of 27% is the nominal tax rate for Cinemark Holdings Inc. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CNK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CNK are equal to 81.9%.

Life of production assets of 13.4 years is the average useful life of capital assets used in Cinemark Holdings Inc operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CNK is equal to -9.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1443.738 million for Cinemark Holdings Inc - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 117.063 million for Cinemark Holdings Inc is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cinemark Holdings Inc at the current share price and the inputted number of shares is $4.7 billion.

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