CNK
Cinemark Holdings, Inc.
$37.66
Leveraged Infrastructure
80%
EV/EBITDA × Cable Broadband Multiple
Strong
·
Conviction
Overvalued
Trading 253.2% above fair value
You pay
$37.66
Bear
$2.60
Fair
$10.66
Bull
$18.73
Bear
$2.60
-93.1%
EBITDA $1B × 7.2x − $3B debt
Fair
$10.66
-71.7%
EBITDA $1B × 9.0x − $3B debt
Bull
$18.73
-50.3%
EBITDA $1B × 10.8x − $3B debt
Adjust Assumptions
9.0x
Key Value Driver
EV/EBITDA multiple (9.0x) vs. 6.6× leverage
Implied Market Multiple
15.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$38.67
Divergence from AlphaVal
72%
Summary
At 9.0x EV/EBITDA on $1B EBITDA, enterprise value is $5B. After subtracting $3B net debt, equity value is $10.66 per share.
Warnings
Debt is 6.6x annual operating profit. Because the company carries so much debt, even small shifts in business value cause big swings in the stock price.
We value this business based on total operating profit relative to total enterprise value (debt + equity). Profit-per-share metrics are unreliable when debt makes up most of the company's value.
Wall Street's average price target is $38.67 (from 31 analysts). Our estimate is 72% below the consensus -- consider that gap carefully.
Key Risks
- Debt refinancing at higher rates compresses equity value quickly
- EBITDA flatters — capex, interest, and taxes eat the cash flow
- Cord-cutting and wireless substitution are structural headwinds for cable