Will Lions Gate Entertainment Stock Roar Once Again?

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Lions Gate Entertainment Corp. (NYSE:LGF) stock has exploded higher in the past two years with the introduction of numerous blockbuster films, including the Hunger Games series. The stock is being hammered on Friday after the company reported its most recent earnings, which were record high numbers for the company, beating earnings expectations but missing consensus estimates for revenues. Still, the quarter was solid and the stock may be on sale at current levels.

The company missed revenues, which came in at $2.63 billion, missing the consensus by $121 million. Adjusted earnings were $370.8 million while adjusted net income was $217.9 million, or $1.58 adjusted basic net income per share. Net income for the year was $152 million, or $1.11 basic net income per share, for the full year fiscal 2014. Revenue for the fourth quarter was $721.9 million with adjusted earnings of $92 million, adjusted net income of $63.5 million, or 46 cents adjusted basic earnings per share, and net income of $49.2 million, or 35 cents basic earnings per share.

The company set all-time highs in adjusted earnings and adjusted net income in the fiscal year, with adjusted earnings gains driven by record margins and a strong global box office performance. The company saw strong results from the company’s filmed entertainment library and lower theatrical marketing costs. The company’s share of income from equity investments also increased due to continued strong gains at EPIX, its partnership with Viacom and MGM, and improved performance at TVGN, its 50/50 partnership with CBS. Adjusted net income benefitted further from decreased interest expense and a lower effective tax rate compared to the prior year.

Compared to the year-ago period, the company is improving, although financials do depend on the timing of film releases. Revenue came in at $2.63 billion for the fiscal year compared to $2.71 billion in the prior year, reflecting a domestic theatrical slate of 13 wide releases compared to 19 in the prior year, and was partially offset by revenue gains in the company’s television production and international businesses.

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