Investment Thesis
Cinemark exhibits a fundamentally unsustainable capital structure with negative free cash flow (-$62M) despite modest revenue growth and decent operating margins. High leverage (9.74x D/E), zero cash position, and weak interest coverage (2.1x) create severe financial distress risk. The company is unprofitable and destroying shareholder value while struggling to fund capex requirements of the theater business.
Strengths
- Operating margin of 23.9% shows core business unit economics are viable
- Positive operating cash flow of $27.7M demonstrates some underlying business generation
- Revenue stabilization with 2.1% YoY growth despite industry headwinds
Risks
- Negative free cash flow of -$62M is unsustainable; capex ($89.7M) exceeds operating cash generation
- Extreme leverage of 9.74x D/E with zero cash reserves creates liquidity crisis vulnerability
- Interest coverage of only 2.1x leaves minimal debt service cushion; any operational decline triggers covenant violations
- Net unprofitable (-$6.4M) with deteriorating EPS (-49.5% YoY) and negative ROE (-3.3%)
- Capital-intensive theater operations require ongoing $89.7M+ annual capex funding absent in current FCF
Key Metrics to Watch
- Free cash flow trend and cash position (currently zero)
- Debt service coverage and interest expense relative to operating income
- Debt refinancing needs and covenant compliance through debt maturity schedule
Financial Metrics
Revenue
643.1M
Net Income
-6.4M
EPS (Diluted)
$-0.06
Free Cash Flow
-62.0M
Total Assets
4.9B
Cash
0.0
Profitability Ratios
Gross Margin
N/A
Operating Margin
23.9%
Net Margin
-1.0%
ROE
-3.3%
ROA
-0.1%
FCF Margin
-9.6%
Balance Sheet & Liquidity
Current Ratio
1.27x
Quick Ratio
1.24x
Debt/Equity
9.74x
Debt/Assets
19.6%
Interest Coverage
2.13x
Long-term Debt
1.9B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T19:27:13.075830 |
Data as of: 2026-03-31 |
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