Lionsgate Shailene Woodley Theo James

Shailene Woodley as Tris and Theo James as Four in Insurgent, which enters theaters on March 20. Source: Lionsgate.

Shares of Lions Gate Entertainment Corp. (NYSE:LGF-A) stock entered the day down over 7% year to date versus a marginal loss for the S&P 500. Will the slide continue, or are better days ahead? A lot depends on how well the business performs. Here's a closer look at what analysts expect to see when this budding Hollywood power player reports fiscal third-quarter earnings tomorrow afternoon:

Fiscal Q3 EstimatesRevenueYOY GrowthEPSYOY Growth
Low estimate $746.60 million (11.1%) $0.54 (14.3%)
High estimate $881.24 million 4.9% $0.81 28.6%
S&P CAPITAL IQ CONSENSUS $778.71 million (7.3%) $0.69 9.5%

Source: S&P Capital IQ.

Investors are expecting a beat, and rightfully so. Three times in the past four quarters, Lions Gate reported more profit than Wall Street was targeting -- including an $0.11-per-share beat in last year's Q3:

Earnings HistoryFQ3 2014FQ4 2014FQ1 2015FQ2 2015
Consensus $0.52 $0.45 $0.20 $0.16
Actual $0.63 $0.42 $0.34 $0.23
DIFFERENCE $0.11 ($0.03) $0.14 $0.07

Source: S&P Capital IQ

Looking at the overall business, I'm watching for momentum in each of these three areas:

1. Spending discipline leading to higher margins. The thesis for Lions Gate stock is that CEO John Feltheimer and his team creatively deploy capital to keep costs low. Pre-sales of foreign market distribution rights to Divergent is a good example. In fiscal Q3, the studio should have benefited from shared production costs for both installments of The Hunger Games: Mockingjay, leading to higher margins despite Part 1 underperforming its predecessor, Catching Fire, at the worldwide box office.

2. New licensing deals. Unlike larger peers Time Warner (NYSE:TWX) and Walt Disney (NYSE:DIS), Lions Gate is still in the early stages of developing a rich licensing and merchandising business outside of syndicating the television shows it produces for various networks. Divergent is supposed to be the catalyst that changes that. Bringing in Peter Levin to head a games division should also help. Look for an update on the conference call.

3. Franchise expansion. March brings the release of Insurgent, which the studio believes will earn at least $350 million worldwide versus just under $289 million for its predecessor, Variety reports. Lions Gate is banking on being able to make many more franchises like this. Look for an update on the studio's ambitions during the conference call. Candidates include the forthcoming drama Child 44, which is based on a trilogy of books, and a TV or movie follow-up to 2013's Ender's Game. A 2016 sequel to the mystery thriller Now You See Me is already in the works.

Lions Gate Entertainment reports fiscal Q3 results Thursday after the market closes; check back here then for our take on the report. And in the meantime, leave a comment to let us know what you're expecting, and what you think of Lions Gate stock at current prices.

When it comes to picking stocks, Tim Beyers routinely diverges from the so-called "smart money." He's also a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission and owned shares of Time Warner and Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool.

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