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Cinemark Holdings (CNK) Q2 Earnings: Will it Disappoint?

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A leading motion picture exhibition company, Cinemark Holdings Inc. (CNK - Free Report) , is scheduled to report second-quarter 2017 financial numbers on Aug 4, before market opens.

Last quarter, the company posted a positive earnings surprise of 11.48%. Moreover, earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 13.09%.

Let’s see how things are shaping up for this announcement.

Factors at Play         

Cinemark Holdings’ price performance has not been so impressive over the past three months. The stock has lost 9.6% against the industry’s gain of 2.9%.

Cinemark continues to face threats from alternative movie streaming services such as Netflix, Inc. (NFLX - Free Report) , and Time Warner Inc.’s HBO Now and Hulu. The recent trend of movie watchers opting for streaming services might hamper profitability of Cinemark. The company also competes with leisure and recreation services company, AMC Entertainment Holdings Inc. (AMC - Free Report) , in the same field.

As of Dec 31, 2016, Cinemark Holdings operated 526 theatres with 5,903 screens in 38 states in the U.S. and in 12 other countries internationally. These include Mexico, and South and Central America.

Of late, the company has been opening and renovating theatres with state-of-the-art amenities. The recent promotional plans of making its Connections Loyalty Program free for members of Cinemark XD auditoriums bode well. Such steps should help the company witness substantial subscriber growth in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Cinemark is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Cinemark has an Earnings ESP of -4.26%. This is because the Most Accurate estimate stands at 45 cents, lower than the Zacks Consensus Estimate of 47 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.


Cinemark Holdings Inc Price and EPS Surprise


Cinemark Holdings Inc Price and EPS Surprise | Cinemark Holdings Inc Quote

Key Pick

Time Warner Inc. , from the Zacks categorized broader Consumer Discretionary sector, has the right combination of elements to post an earnings beat when it expectedly reports second-quarter 2017 results on Aug 2. The company has an Earnings ESP of +1.68% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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