Lionsgate Entertainment (LGF-A -1.04%) (LGF-B -1.10%) posted strong third-quarter results on Thursday evening and the entertainment studio's stock responded with strong jumps on Friday. Class A shares rose as much as 9.9% while Class B stubs topped out at 10.5%. By 3 p.m. EST, the two stock classes had retreated to gains of 5.7% and 6.5%, respectively.
Third-quarter revenue rose 7% year over year to $999 million. Adjusted earnings landed at $0.14 per share, down from $0.35 per share in the year-ago period. The analyst consensus pointed to a net loss near $0.13 per share on top-line sales of roughly $944 million, and Lionsgate absolutely crushed those expectations.
The company's cinematic operations profited from blockbuster box-office takes by Rian Johnson's thriller Knives Out, political drama Bombshell, and the third title in Keanu Reeves' action-packed John Wick franchise. Lionsgate also signed up 1 million new subscribers to its collection of streaming video platforms. It's no surprise to see Lionsgate's shares soaring on an analyst-stumping report like this one.
Lionsgate's two stock classes have now gained more than 20% over the last three months, but they are also trading 40% lower from a 52-week perspective. The stocks are trading at deep-discount valuation ratios normally reserved for companies on the brink of disaster, even though Lionsgate's business appears to be in good health.