What is Cinemark Holdings Predictability Rank?
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Warren Buffett said many times that the companies he likes are:
1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.
It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.
GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.
Cinemark Holdings Predictability Rank Calculation
In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.
Our study may be subject to these biases and assumptions:
Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.
The correlation between business predictability and investment returns of a company is showed below.
Correlation Between Business Predictability and Investment Returns
| Predictables | Non-Predictable | All stocks |
|---|
| Total Number of stocks | 570 | 1833 | 2403 |
| Total Lost Money | 61 | 830 | 891 |
| Total Lost More Than 50% | 18 | 412 | 430 |
| Total Lost More Than 90% | 4 | 86 | 90 |
| Average Gain | 260.6% | 100.0% | 138.1% |
| Median Gain | 150.0% | 13.0% | 39.0% |
| Maximum Gain | 2852.0% | 11483.0% | 11483.0% |
| Maximum Loss | -100.0% | -100.0% | -100.0% |
| Annualized Average Gain | 12.7% | 6.7% | 8.4% |
| Annualized Median Gain | 8.9% | 1.1% | 3.1% |
For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.
| Predictability Rank | 5-Star | 4.5-Star | 4-Star | 3.5-Star | 3-Star | 2.5-Star | 2-Star | 1-Star (non-predictable) | Average among all |
|---|
| % Out of All 2403 Stocks |
3.3% |
2.9% |
3.7% |
3.3% |
3.3% |
3.7% |
3.3% |
76.3% |
100% |
| % that are in Loss (10y) |
3% |
10% |
8% |
9% |
11% |
18% |
16% |
45% |
37% |
| Average Gain (10y) |
364.6% |
330.9% |
278.0% |
235.1% |
243.5% |
227.8% |
154.8% |
100.0% |
138.1% |
| Median Gain (10y) |
238.5% |
193.5% |
171.0% |
159.0% |
132.5% |
113.5% |
87.0% |
13.0% |
39.0% |
| Maximum Gainer |
2228.0% |
2547.0% |
2452.0% |
2852.0% |
2432.0% |
1892.0% |
1807.0% |
11483.0% |
11483.0% |
| Maximum Loser |
-82.0% |
-53.0% |
-67.0% |
-100.0% |
-83.0% |
-100.0% |
-78.0% |
-100.0% |
-100.0% |
| Annualized Average Gain |
15.4% |
14.6% |
13.2% |
12.0% |
12.2% |
11.7% |
9.1% |
6.7% |
8.4% |
| Annualized Median Gain |
12.1% |
10.6% |
9.8% |
9.3% |
8.2% |
7.3% |
6.0% |
1.1% |
3.1% |
For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
Cinemark Holdings (Cinemark Holdings) Business Description
Traded in Other Exchanges
Address
3900 Dallas Parkway, Suite 500, Plano, TX, USA, 75093
Cinemark Holdings Inc is geographically diverse operators in the motion picture exhibition industry in the United States. The company operates in around 518 theatres and 5,847 screens in the United States and Latin America. The company generates revenue from filmed entertainment box office receipts and concession sales, with additional revenue from screen advertising, screen rental and other revenue streams, such as transactional fees, vendor marketing promotions, studio trailer placements, meeting rentals and electronic video games located in some of the theatres. Majority of Cinemark's theaters are located in midsize cities or suburbs of large cities.
Executives
| Kevin Leroy Mitchell |
director |
3900 DALLAS PARKWAY, PLANO TX 75093 |
| Enrique Senior |
director |
711 FIFTH AVENUE, NEW YORK NY 10022 |
| Wanda Marie Gierhart |
officer: EVP - Chief Marketing Officer |
3900 DALLAS PARKWAY, PLANO TX 75093 |
| Caren Bedard |
officer: SVP-Global Controller |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
| Michael Cavalier |
officer: SVP-General Counsel |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
| Melissa Thomas |
officer: EVP, Chief Financial Officer |
600 WEST CHICAGO AVE, STE 400, CHICAGO IL 60654 |
| Valmir Fernandes |
officer: Pr - Cinemark International |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
| Mark Zoradi |
director |
C/O DREAMWORKS ANIMATION SKG, INC., 1000 FLOWER STREET, GLENDALE CA 91201 |
| Ximena G Humrichouse |
director |
1230 RIVER BEND DRIVE, SUITE 215, DALLAS TX 75247 |
| Lee Roy Mitchell |
director, 10 percent owner, officer: Chairman of the Board |
|
| Sean Gamble |
officer: Chief Financial Officer |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
| Tom Owens |
officer: SVP - Real Estate |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
| Nancy S. Loewe |
director |
351 PHELPS DRIVE, IRVING TX 75038 |
| Timothy Warner |
officer: President and COO |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
| Robert Copple |
officer: Chief Financial Officer |
3900 DALLAS PARKWAY, SUITE 500, PLANO TX 75093 |
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