CNK

We rate Cinemark Holdings, Inc. (CNK) as a Reduce with a composite score of 48.6/100 at a current price of $25.68. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (83th percentile) and momentum (53th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (32th percentile) and investment (33th percentile) tempers our overall conviction. We assign a No Moat rating (34/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Cinemark Holdings, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 48.6/100 places it at rank #2241 in our full 7,333-stock universe. At $3.2B in market capitalization, Cinemark Holdings, Inc. is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 17%, though momentum at the 53th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 75% (+15.4pp vs sector) narrow to operating margins of 5% (+1.4pp vs sector) and net margins of 7.2%, yielding a gross-to-net conversion rate of 10%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $25.68, Cinemark Holdings, Inc. is trading near fair value based on current fundamentals. Our value factor score of 42/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 10.7x (a 55% discount to the sector median of 23.7x), EV/EBITDA of 5.1x (discounted to peers), P/B of 361.9x, P/S of 0.9x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to Cinemark Holdings, Inc.. The company exhibits strong financial stability with a beta of 0.30, conservative leverage (-100% D/E), and a stability factor in the 83th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: weak quality scores (32th percentile); low beta of 0.30 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 83th percentile and quality factor at the 32th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 75% provide a buffer against cost pressures; conservative leverage (-100% D/E) limits balance sheet risk; above-average stability (83th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Cinemark Holdings, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 3394.2%, and the balance sheet is managed within acceptable parameters (D/E: -100%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Cinemark Holdings, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.86% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Cinemark Holdings, Inc. receives a Reduce rating with a composite score of 48.6/100 (rank #2241 of 7,333). Our quantitative framework assigns a No Moat (34/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 49/100.

Our analysis does not support a constructive view on Cinemark Holdings, Inc. at this time. The combination of limited competitive advantages, low uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.