Places, everyone. Camera to speed, and . action! The scene is rolling . time now to check in with Lions Gate Entertainment's (NYSE:LGF) earnings report.

What a year it was for this movie house. For fiscal 2005, which ended March 31, revenues increased 124% to $842.6 million. Free cash flow had a huge turnaround -- last year saw negative $117.3 million on the statement, while this year, the company generated $93 million. Net earnings per share on a diluted basis came in at $0.20, against a $1.35 loss in 2004.

Lions Gate Entertainment knows what it's doing, at least for now. It's producing movies the smart way, targeting young viewers with a taste for edgy fare. The earnings release credits films such as Saw, Open Water, and The Punisher for driving the company's fortunes. Shareholders of Marvel Enterprises (NYSE:MVL) should take note that a Punisher sequel is in the works. (I hope the sequel does a bit better than the original.)

I see good things for Lions Gate Entertainment going forward. I believe there's value in its fresh deal with Twisted Pictures, producers of the aforementioned horror flick Saw (whose ending I never saw coming). Even the agreement's initial project, a thriller called Catacombs, sounds logical. Furthermore, the company seems to display instinctual skill in its strategy for acquiring new films.

The stock chart shows that Lions Gate's common equity has had a run-up in the past year, followed by a slight plateau. Buying the stock now obviously might present some risk -- it might be better to get in on some significant pullbacks. Yet for those who want to put on some dark shades and add a piece of Hollywood to their long-term portfolio, I'd say that Lions Gate Entertainment would make a decent bet. I like the moves currently in their pipeline, and you can't ignore the possibility of an eventual takeover either.

Keep in mind, though, that the movie business is risky; a string of duds could gravely injure Lions Gate Entertainment. Shareholders in Pixar (NASDAQ:PIXR), DreamWorks Animation (NYSE:DWA), and Disney (NYSE:DIS) know that bad pictures can dampen stock prices to some degree. For Disney, the effect might not be as strong due to the company's diversification; for Pixar, a series of bad projects could be disastrous. As long as a potential investor keeps this uncertainty in mind, Lions Gate might just have star potential.

What do you think of Lions Gate Entertainment's earnings? Let us know what's on your mind at the Lions Gate Entertainment community board.

Straight from the Lion's mouth:

Pixar, DreamWorks, and Marvel are Motley Fool Stock Advisor picks. To learn Tom and David Gardner's picks for the next stock market blockbusters, subscribe today.

Fool contributor Steven Mallas owns shares of Disney and Marvel Enterprises. He hopes he can successfully guess the ending of Saw 2. The Fool has a disclosure policy.