Never underestimate the soothing effects of a happy cat, purring its contentment.
Investors upset over Lions Gate's
But the thing that seems to be saving the stock this morning is guidance, which looks as good as yesterday's actual results were bad. Peering ahead, Lions Gate says it will take in more than $400 million in revenue during the current fourth fiscal quarter of 2008, thus ending the year with $1.2 billion. The company also expects to generate $110 million in free cash flow.
That will be a neat trick, because so far this year, Lions Gate has only managed to burn cash. With three quarters down and less than one to go, the company's free cash flow tally stands at negative $54.6 million -- a far cry from the $58 million in positive free cash flow racked up by this time last year. But let's assume management can indeed pull the rabbit out of its hat. What would Lions Gate be worth if it does hit the $110 million mark for this year?
$110 million in cash profits would mean that Lions Gate trades for a measly 10 times price-to-free cash flow. For comparison, Marvel
Given Lions Gate's fantastic growth, penchant for "edgy" films and television shows, and willingness to seek business in new niches (I'm referring to last quarter's announced co-production deal with Mexico's Grupo Televisa SA
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Fool contributor Rich Smith owns shares of Marvel. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 751 out of nearly 45,000 rated players. DreamWorks, Disney, and Marvel are Stock Advisor selections. The Fool has a disclosure policy.