Please ensure Javascript is enabled for purposes of website accessibility

Why Lions Gate Entertainment Corp. Jumped Today

By Anders Bylund - May 26, 2017 at 4:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The movie and TV content studio reported its first full quarter since merging with Starz. Mr. Market applauded the effort.

What happened

Shares of Lions Gate Entertainment (LGF-A -2.51%) (LGF-B -2.54%) soared in Friday's trading session following the TV and cinema content-studio's release of results for the fourth quarter of fiscal year 2017. Non-voting Class B shares of Lions Gate rose as much as 9.8% at 3:00 p.m. EDT. The vote-endowed Class A shares reached a 9.1% gain at the same time.

So what

Wall Street analysts had expected Lions Gate's fourth-quarter sales to land near $1.19 billion, yielding earnings of roughly $0.21 per share. Instead, the company reported GAAP earnings of $0.28 per diluted share and adjusted earnings of $0.54 per diluted share. Revenues surged 59% higher year over year thanks to the acquisition of premium cable network Starz, which closed near the end of the third quarter. Comparing apples to non-GAAP apples, Lions Gate's sales rose 2% over the combined revenues of Starz and Lions Gate in the year-ago period.

Excited crowd in a dark movie theater.

Image source: Getty Images.

Now what

Judging by the first full quarter of Lions Gate's post-merger operations, the marriage is off to a good start. Starz continues to grow its premium channel subscriber counts, despite the merger activity and the general trend toward cord-cutting in American households. Lions Gate delivered several solid hit movies near the end of 2017, including award-winning La La Land, starring Ryan Gosling, and Keanu Reeves' thriller John Wick: Chapter Two.

Looking ahead, Lions Gate's movie slate in the second half of this calendar year pulls in star power from Julia Roberts, Ryan Reynolds, Samuel L. Jackson, and Owen Wilson. There's another title coming up in the Saw horror series, a big-screen My Little Pony adventure, and another crowd-pleaser from Tyler Perry's hit-making workshop.

In other words, it's steady as she goes, with the bonus of having Starz's media distribution savvy in-house alongside Lions Gate's proven production skills.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
LGF-A
$9.31 (-2.51%) $0.24
Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
LGF-B
$8.83 (-2.54%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.