Why Cinemark Stock Is Up Today
Key Points
Third-quarter attendance was up 18%.
Cinemark's profits are surging.
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Shares of Cinemark Holdings (NYSE:CNK) climbed 5% on Monday, continuing the movie theater chain's post-earnings announcement rally.
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Soaring profits
Cinemark reported solid third-quarter results last week. Revenue rose 24% year over year to nearly $1.1 billion, driven by an 18% jump in attendance to 64 million patrons.
Moviegoers are also spending more on food and beverages. Worldwide concession revenue per patron increased 5% to $6.50.
Better still, Cinemark's profits are rising even faster. Net income soared 148% to $123 million. Earnings per share, boosted by stock buybacks, rocketed 160% to $1.04.
"Our ability to translate positive box office momentum from a compelling slate of summer releases into consistent, meaningful earnings growth reflects the strength of our operating model, the effectiveness of our team, and the sustained impact of our strategic initiatives," CEO Sean Gamble said.
A winning strategy
Cinemark's focus on premium offerings is helping it win market share and expand its profit margins. Box office for premium large formats like XD, IMAX, and ScreenX leaped 50%. Revenue from motion seats -- which move, tilt, and vibrate in synchronization with a movie -- jumped 62%.
Cinemark also has one of the healthier balance sheets in the movie theater industry, with $556 million in cash reserves against $1.9 billion of long-term debt, bolstered by more than $300 million of free cash flow over the trailing nine months.
"Looking ahead, we remain highly confident in our long-term growth prospects and value proposition, supported by favorable consumer trends and content dynamics, as well as the distinct advantages we derive from our high-quality circuit, healthy balance sheet, and differentiated competitive position," Gamble said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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