Marvel Moves Higher

Less than two months after raising third-quarter targets, Marvel (NYSE: MVL  ) is at it again. With its reporting date still over three weeks away, the maker of comic-book superheroes said it would "exceed the high end of its previous financial guidance."

Management now expects to earn $0.37 to $0.41 per share in the third quarter, and $1.38 to $1.42 for the full year. That's significantly higher than previous guidance, and the stock is up over 10% today in response to the good news.

The reason Marvel is hulking up its earnings? Once again, strong performance in its high-margin licensing division. Yes, the company is outsourcing most of its low-margin toy production, and is licensing its library of over 4,700 characters instead. As David Gardner wrote earlier this year, "Among business management decisions made in this country in 2002, Marvel's decision to exit the toy business stands out as one of the better ones."

The home of The Hulk, X-Men, and Spider-Man has rewarded Motley Fool Stock Advisor subscribers handsomely; it's now up 415% since David's original recommendation. How much future success is the market factoring into the current price? Hard to say, but as David points out, "You have to acknowledge the timeless draw of action and fantasy, and recognize that Marvel is brilliantly positioned to deliver these two things for a long time."

For more on Marvel's profitability, its skimpy analyst coverage, what may drive future earnings, and its similarities to Pixar (Nasdaq: PIXR  ) , check out this two-part series.