How High Can Lions Gate Soar?

Tomorrow, Lions Gate Entertainment (NYSE: LGF  ) will release its latest quarterly results. With the stock having set new all-time highs throughout the past year, investors are hoping that the good times will continue for quite a while longer.

Lions Gate first got the attention of many investors when it entered into a production agreement for movies based on the popular Hunger Games trilogy. With the first of four planned installments having been a blockbuster when it was released in March 2012, Lions Gate hopes that the planned release of the second movie this November will prove equally lucrative for the company. Let's take an early look at what's been happening with Lions Gate over the past quarter and what we're likely to see in its quarterly report.

Stats on Lions Gate

Analyst EPS Estimate

$0.42

Year-Ago EPS

($0.17)

Revenue Estimate

$732.08 million

Change From Year-Ago Revenue

13.5%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

What's playing for Lions Gate's earnings this quarter?
Analysts have had mixed views about Lions Gate's earnings in recent months, boosting their March-quarter estimates by $0.02 per share but cutting a penny from their consensus earnings per share for the fiscal 2014 year. The shares, meanwhile, have continued to soar, rising 40% just since late February.

Lions Gate has more going for it than just the Hunger Games movies. It produces both movies and television productions, with a stable of television series including the popular Mad Men and Anger Management. The company also owns a 50% stake in the TV Guide cable channel and website, with a new agreement in March with CBS (NYSE: CBS  ) in which Lions Gate gave up its former majority control of the TV Guide joint venture. Both companies expect to push TV Guide in new directions to try to boost its appeal and revenue-generating capacity.

One interesting area in which Lions Gate could see further gains is in producing entertainment for content-delivery companies. The company produces the new prison drama/comedy Orange Is the New Black for Netflix (NASDAQ: NFLX  ) , which has taken large steps lately to try to boost its own proprietary content. Under the deal, Lions Gate earns a profit for producing the show, while Netflix retains exclusive rights to draw more subscribers to its streaming service.

Still, Hunger Games remains the big focus. Although neither Netflix nor Amazon.com has been heavily promoting the first movie as a streaming option on their respective services, it's possible that now that they have the movie available, they'll make more of a push as the November release date for Catching Fire approaches.

In Lions Gate's quarterly report, be sure to look past Hunger Games-related news to see how the rest of the company is doing. Long-term investors need to think about how the company will survive several years down the road when the blockbuster series has run its course, and paying attention to that now should help you avoid any unpleasant surprises lately.

While Lions Gate has headed higher lately, the tumultuous performance of Netflix shares since the summer of 2011 has caused headaches for many devoted shareholders. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

Click here to add Lions Gate to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2458746, ~/Articles/ArticleHandler.aspx, 7/28/2014 3:27:24 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement