DreamWorks Animation (NYSE: DWA) hasn't made many headlines since Shrek Forever After's terrible opening weekend at the box office. That was a tough month for DreamWorks owners; the stock fell 30% on the weak performance of a series that was supposed to be a stalwart comparable to Disney's (NYSE: DIS) Toy Story.

Since then, the fourth Shrek has quietly outperformed expectations, thanks largely to the international box office. One analyst had a revised estimate of $260 million domestic and $364 million international box office. Domestically, Shrek 4 didn't meet the revised mark -- but internationally, it crushed estimates.

Shrek 4 box office

Metric

Domestic

International

Total

Original Estimate

$315

$441

$756

Revised Estimate

$260

$364

$624

Actual

$237

$441

$678

Source: BoxOfficeMojo.com, Benjamin Mogil, Thomas Weisel Partners. Dollar amounts in millions.

As the table shows, international box office wound up more than 20% higher than revised estimates, and represented 65% of total box office. By comparison, Toy Story 3 only managed 57.3% of its box office internationally. I guess only the U.S. had tired of the big green ogre.

The market reacted negatively to a weak opening weekend and revised estimates, but has yet to recognize Shrek 4's solid performance since then. This could present an opportunity for investors watching more than just headlines.

Future films an unknown
Looking ahead, DreamWorks will have to move past Shrek to new characters for its films, and no one knows who will take Shrek's torch. Expanding production to three movies per year should help DreamWorks' earnings, as will CEO Jeff Katzenberg's obsession with being on the cutting edge of technology. So far, he's had a hard time figuring out how to maximize the added revenue from RealD (NYSE: RLD) and IMAX (Nasdaq: IMAX) theaters, but those numbers should improve in coming films.

DreamWorks' next film, Megamind (which appears eerily similar to this summer's non-DreamWorks hit, Despicable Me), has relatively low expectations compared with Shrek, which could insulate investors from the effects of another disappointing opening. Even though the current 25 P/E ratio doesn't exactly scream "bargain," the $1.73 estimate for 2010 puts a more reasonable 17.8 forward P/E multiple on the stock. In addition, DreamWorks has shown remarkable consistency, grossing more than $180 million domestically in each of its last five films. I think there are low expectations priced into DreamWorks' stock. If the company can continue to beat estimates, as it has done for the past four quarters, long-term investors should be rewarded.

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Fool contributor Travis Hoium is long DreamWorks Animation and IMAX. Walt Disney is a Motley Fool Inside Value selection. IMAX is a Motley Fool Rule Breakers pick. Walt Disney and DreamWorks Animation SKG are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.