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Bear of the Day: Cinemark (CNK)

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Cinemark Holdings, Inc. (CNK - Free Report) is suffering after Hollywood delivered a lackluster summer movie season. This Zacks Rank #5 (Strong Sell) is expected to see a decline in earnings in 2017.

Cinemark is one of the largest movie theatre chains in the world. It operates 529 theatres with 5,926 screens in 41 US states, Brazil, Argentina and 13 other Latin American countries.

Met the Second Quarter Estimate

On Aug 4, Cinemark reported its second quarter results and met the Zacks Consensus of $0.44.

Revenue rose just 0.9% to $751.2 million from $744.4 million a year ago. Concession revenue per patron rose 8.9% to $3.78 and average ticket price increased 3.7% to $6.48.

Its box office results exceeded the North American industry and it saw record food and beverage per caps.

A lot depends on Hollywood, and its content, however. The summer box office ended on a downward note as the August films failed to catch on which resulted in one weekend being the lowest box office results in 16 years.

However, some big name films, including the next Star Wars installment, are slated to close out the year with a bang.

Estimates Lowered for 2017 and 2018

But analysts still see a tough time for the theatre chains due to competition from at home content providers like Netflix, STARZ and HBO.

3 estimates were lowered, with one being raised, for 2017 over the last month which pushed down the Zacks Consensus Estimate to $2.14 from $2.34 just 2 months ago.

That's an earnings decline of 4.6% compared to 2016 when the company made $2.24.

Earnings are expected to improve in 2018, with earnings growth of 9%, but the estimates have still been lowered over the last 2 months.

Shares Hit New 52-Week Lows

The shares have been weak in 2017.

They're down 15.4% year-to-date and are now hitting new 1-year lows.

But for value investors, they're starting to look interesting. Cinemark trades with a forward P/E of just 15.

All the movie theatre chains are struggling, with estimates being cut on AMC Entertainment (AMC - Free Report) and Regal Entertainment Group RGC. Like Cinemark, they are expected to see a decline in earnings this year as well.

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