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Why Shares of Lions Gate Entertainment Corp. Jumped Today

By Anders Bylund – Nov 4, 2016 at 2:36PM

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Driven by a balanced boost across TV and film properties, the content production studio crushed Wall Street's second-quarter projections.

Image source: Getty Images.

What happened

Shares of Lions Gate Entertainment (LGF-A 2.88%) jumped as much as 13.3% higher in Friday's trading session, settling down near a 12% gain at 1:30 p.m. EDT. The entertainment content producer published a strong second-quarter earnings report on Thursday night, leaving analysts and investors cheered.

So what

Lions Gate reported adjusted second-quarter earnings of $0.11 per diluted share, up from an adjusted net loss of $0.19 per share in the year-ago period. Revenue rose 34% year over year, coming in at $639.5 million. Sales in the motion picture division increased 31%, while the television production group lifted its revenue 43% higher.

Your average analyst would have settled for an adjusted net loss of $0.25 per share on sales of $554 million. It wasn't even close.

Now what

This outperformance looks even more impressive when you consider that it was done while preparing for a blockbuster $4.4 billion merger with cable channel operator Starz (STRZA) (NASDAQ: STRZB).

If you thought that swinging to a profit while delivering 34% revenue growth was impressive, Lions Gate CEO John Feltheimer still thinks that the company's best days lie ahead and will be tied to the Starz deal.

"Despite the velocity of change in the film and television landscape, we remain excited about what we continue to build, a vertically integrated, diversified platform that encompasses a non-replicable portfolio of assets," Feltheimer said in a conference call with analysts. "We believe that the combination of Lions Gate and Starz has the potential to supercharge our respective businesses, amplifying existing strengths, opening the door to a broad array of new ones and ultimately, creating a massive global content engine."

Anders Bylund has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Lions Gate Entertainment. The Motley Fool also recommends Starz.

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