Spidey Saves Marvel's Earnings: Fool by Numbers

Earlier today, Stock Advisor selection Marvel Entertainment (NYSE: MVL  ) released earnings for the fourth quarter ended March 31.

  • Sales and profits skyrocketed, with Marvel recognizing more than $50 million in deferred up-front payments received last year from its Spider-Man joint venture with Sony (NYSE: SNE  ) .
  • Without similarly sized up-front payments in Q1, free cash flow declined by 73%. Even so, Marvel produced more than $22 million in cash.
  • And the publishing business continues to do well, earning a 42% operating margin -- its best since 2004 -- on higher volume and better pricing for its Civil War series and the death of comic icon Captain America.
  • Perhaps that's why the 826 amateur and professional investors covering the stock in our Motley Fool CAPS investor intelligence database give Marvel four of the maximum five stars.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$151,402

$90,058

68.1%

Net Profit

$46,842

$17,509

167.5%

EPS

$0.56

$0.19

194.7%

Diluted Shares

 84,020

 91,467

(8.1%)

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

90.17%

73.48%

16.69

Operating Margin

66.75%

35.55%

31.20

Net Margin

30.94%

19.44%

11.50

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$40,831

$29,367

39%

Accounts Rec.

$41,885

$56,809

(26.3%)

Inventory

$11,115

$15,237

(27.1%)

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$3,574

$3,955

(9.6%)

Long-Term Debt

$49,500

$26,800

84.7%

The balance sheet reflects the company's health.

Cash Flow Checkup

Q1 2007

Q1 2006

Change

Cash From Ops.

$24,289

$94,931

(74.4%)

Capital Expenditures

$1,554

$9,065

(82.9%)

Free Cash Flow

$22,735

$85,866

(73.5%)

Free cash flow is a Fool's best friend.

Related Foolishness:

Marvel is a Stock Advisor pick. Click here to get 30 days of free access to the entire portfolio, which is beating the market by nearly 39%.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Tim Beyers, who is ranked 6,444 out of more than 28,400 rated investors in CAPS, still owns more than 2,000 comic books but didn't own shares in any of the companies mentioned in this article at the time of publication. His portfolio holdings can be found at Tim's Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy always adds up.

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