Can Madagascar become the next Shrek? DreamWorks Animation
The cartoon company led by former Disney
Like its rival and fellow Stock Advisor pick Pixar
I have to admit, I wasn't too impressed with Madagascar's opening weekend. But the film has made $500 million across the planet, with nearly 40% of those dollars coming from the U.S. I think that qualifies as a successful franchise.
Does knowing that more films like Shrek and Madagascar are coming down the pike make the current valuation of the stock seem attractive? The Fool's own Seth Jayson has tackled this issue before, concluding that speculative gastrointestinal instinct (i.e., "going with your gut") might prove a more useful tool than a discounted cash flow analysis in this particular case. Getting a handle on a movie studio's future income projections is astoundingly difficult at best.
This is why investing in media companies absolutely requires long-term patience. Bottom line: Keep an eye on the pipeline. Watch every announced project. If you like what's coming up, and if the brand equity seems to be improving with each idea that the company wants to bring to fruition, then it makes sense to be an owner. DreamWorks Animation's stock may not be as cheap since it has bounced off recent lows, but with the Madagascar sequel to look forward to, it might still represent a nice investment.
Toon up with further Foolishness:
- Dream On, DreamWorks
- DreamWorks Not So Dreamy
- Hollywood's New Dream Team?
- Plus, get in on the discussion at the DreamWorks Animation board.