Cinemark Holdings, Inc. (CNK): A Bull Case Theory

We came across a bullish thesis on Cinemark Holdings, Inc. on Value Don't Lie’s Substack. In this article, we will summarize the bulls’ thesis on CNK. Cinemark Holdings, Inc.'s share was trading at $23.68 as of January 30th. CNK’s trailing and forward P/E were 21.12 and 11.88 respectively according to Yahoo Finance.

Cinemark Holdings, Inc., together with its subsidiaries, engages in the motion picture exhibition business. CNK has been beaten down over the past year, with shares declining from $36 to $23 (-36%), largely due to fears surrounding the Netflix/Warner Bros. acquisition. These concerns, however, may be overblown, and the stock now trades at an attractive ~10x free cash flow and <7x EV/EBITDA.

Cinemark operates 497 theaters with 5,653 screens across the U.S. and Latin America, making it the #3 operator behind AMC and Regal, with a growing 15% market share in North America. Its business model is driven by ticket sales and high-margin concession sales, with concessions accounting for the majority of profits at ~81% product margins. The company’s 1.45 million Movie Club subscribers represent the largest paying loyalty base in the industry, helping drive consistent concession revenue despite volume declines.

While attendance remains below pre-COVID levels at ~72% of FY2019, Cinemark has offset declining foot traffic with higher ticket pricing and increased concession spending, which has boosted per-guest concession sales by 55% since 2019. Following heavy debt repayment since 2021, capital allocation is now shifting toward shareholder returns, with $200 million in buybacks and the reinstatement of a dividend in 2025.

Analysts are optimistic about 2026 as delayed film releases from recent Hollywood strikes are expected to boost box office performance by ~10%, supporting EBITDA growth. With a market cap of $2.74 billion, net debt of $1.42 billion, and 2025 EBITDA estimates of $620 million (6.7x EV/EBITDA), the stock is significantly undervalued relative to historical multiples. At 8x 2026 EBITDA of $717 million, shares could reach $36, offering ~57% upside, not including additional returns from ongoing buybacks or potential M&A, making Cinemark an attractive risk/reward opportunity for investors.

Previously, we covered a bullish thesis on The Marcus Corporation (NYSE:MCS) by Waterboy Investing in October 2024, which highlighted the company’s diversified theater and hotel businesses, strong real estate assets, and potential for multiple re-rating with capital returns. MCS’s stock price has depreciated by approximately 2.39% since our coverage. Value Don’t Lie shares a similar thesis but emphasizes Cinemark’s scale, concession-driven margins, and recovery potential post-COVID and Hollywood strikes.

Cinemark Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held CNK at the end of the third quarter which was 48 in the previous quarter. While we acknowledge the potential of CNK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.