DreamWorks Animation (Nasdaq: DWA) only managed to meet estimates last quarter, but investors hope that it will surpass expectations this quarter. The company will unveil its latest earnings on Tuesday, July 26. DreamWorks Animation is engaged in the development, production, and exploitation of animated films and characters in the worldwide theatrical, home entertainment, television, merchandising and licensing, and other markets.

What analysts say:

  • Buy, sell, or hold?: Analysts generally think investors should hang on to DreamWorks Animation, with half rating the stock a hold. Analysts don't like DreamWorks Animation as much as competitor Lions Gate Entertainment overall. Four out of 10 analysts rate Lions Gate Entertainment a buy, compared with five of 16 for DreamWorks Animation. While analysts still rate the stock a hold, they are a little more optimistic about it compared with three months ago.
  • Revenue forecasts: On average, analysts predict $198.3 million in revenue this quarter. That would represent a rise of 25.4% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.40 per share. Estimates range from $0.15 to $0.86.

What our community says:
CAPS All-Stars are solidly behind the stock, with 95.9% giving it an "outperform" rating. The community at large agrees with the All-Stars, with 94% assigning it a rating of "outperform." Fools are gung-ho about DreamWorks Animation and haven't been shy with their opinions lately, logging 325 posts in the past 30 days. Even with a robust four out of five stars, DreamWorks Animation's CAPS rating falls a little short of the community's upbeat outlook.

Management:
DreamWorks Animation's profit has risen year over year by an average of 33.2%. A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

Quarter Q1 Q4 Q3 Q2
Gross Margin 33.3% 29.7% 43% 37.5%
Operating Margin 5.3% 18.2% 28.2% 19.7%
Net Margin 8.1% 30.9% 21.1% 15.2%
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