Wait! It’s Too Soon to Give Up on DreamWorks Animation SKG Inc.!

Subpar returns for the opening weekend of “Mr. Peabody & Sherman” send the stock falling, continuing a year-to-date slide that shows no signs of slowing.

Mar 14, 2014 at 11:41AM
Waybackmachine

The famous WABAC machine from The Rocky and Bullwinkle Show. Source: Wikimedia Commons.

A softer-than-expected performance for Mr. Peabody & Sherman has some investors selling shares of DreamWorks Animation SKG (NASDAQ:DWA). That's a mistake, Fool contributor Tim Beyers says in the following video.

The stock is down about 3.4% over the past week and more than 18% year-to-date. If only executives at distributor Twenty-First Century Fox (NASDAQ:FOXA) had Mr. Peabody's famous WABAC Machine. They could go back in time and boost their marketing push for this latest try at developing a new animated franchise for the DreamWorks/Fox team-up.

Or maybe it wouldn't have mattered. Mr. Peabody & Sherman cost $145 million to produce, putting box office break-even at $580 million in worldwide grosses. Only eight of the 28 DreamWorks Animation-produced epics tracked by Box Office Mojo have reached that plateau. And of those, only two were franchise openers: 2008's Kung-Fu Panda and 2013's The Croods.

Tim says the sell-off in DreamWorks stock is still undeserved.

Mr. Peabody & Sherman gets strong ratings from audiences at Rotten Tomatoes, earning a covered "A" CinemaScore. That should help build buzz for the film and boost walk-in traffic in the coming weeks. The stock, meanwhile, trades for less than half the long-term earnings growth rate analysts expect -- a bargain that won't last forever.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, and Netflix at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Apple, DreamWorks Animation, Google, and Netflix. The Motley Fool owns shares of Apple, Google, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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