Wallace & Gromit: The Curse of the Were-Rabbit arrived in theaters too late to contribute to the earnings results that Motley Fool Stock Advisor pick DreamWorks Animation (NYSE:DWA) will report Thursday. But even in the absence of rabbit revenues, investors are hoping to see a sequential improvement in the company's earnings results.
Analysts project that the quarter just ended will see DreamWorks breaking even, profits-wise, on a bit over $43 million in revenues. But don't take that as certain -- this picture show is still moving. Of the dozen or so analysts polled, estimates for Thursday's results range from as low as an $0.08 per share loss, to as high as a $0.04 profit. The one thing that all of those estimates have in common: They mark a huge decline in profits from the $0.63 per share that DreamWorks earned one year ago.
Such is the life of a movie mogul. Try as you might, it's hard to field an ever-increasing number of blockbuster hits every quarter, with each one doing more than 10% better than the last. With these kinds of companies, a long-term investor truly has little choice but to think. long-term.
With that in mind, when reviewing DreamWorks' numbers Thursday, a Fool is best advised not to focus too much on what happened last quarter (answer: not much), and, instead, pay attention to what news the company chooses to reveal about how the quarter to come -- the quarter we're in now -- is shaping up. True, in that regard, DreamWorks' medium-term outlook seems dim. When Wallaceand Gromit premiered last month, it handily bested Disney's (NYSE:DIS) Flightplan and Time Warner's (NYSE:TWX) Corpse Bride for top-grossing film at the box office. But the claymation flick's sales weren't a patch on DreamWorks' earlier megahit, Shrek 2, which grossed nearly seven times as much on its own opening weekend.
As such, I suspect analysts are pretty much on the money in their guesstimation that DreamWorks will earn considerably fewer profits this year than last. Maybe not exactly the $0.85 per diluted share being predicted, but certainly nowhere near $3.26 per share before charges earned in 2004. Regardless, this is a company that cranks out films at a faster clip than does fellow Stock Advisor pick Pixar (NASDAQ:PIXR).
Not to put too fine a point on it, but Wallace's success doesn't make or break DreamWorks' future. There's always hope that a Shrek 3: Ogres Gone Wild can put this company's profits right back on the road to growth.
Like movies? Read more about movie makers:
- Foolish Forecast: Screening Pixar
- Chicken Feed for Disney
- Big Stakes for Chicken Little
- Claymation Tops the Charts
DreamWorks, Pixar, and Time Warner are all recommendations of Motley Fool Stock Advisor. Are you looking for great companies at great prices? Let Motley Fool co-founders David and Tom Gardner find the next big winner for you. Check out afree trialsubscription to Stock Advisor today.
Fool contributor Rich Smith does not own shares in any company mentioned here.
