Lions Gate Entertainment Corp. (LGF) Earnings: Boffo With Blockbusters

Page 1 of 2

Lions Gate Entertainment Corp. (USA) (NYSE: LGF) reported Q3 earnings after the bell on February 11 and earnings were once again boffo. Revenues soared in every division, four or six fold in most of them, with net income coming in at $0.27 a share compared to a year ago loss and beating expectations of $0.17 a share. The company also earned $125.2 million in free cash flow in the quarter. I bet Mark Cuban and Carl Icahn (who sold out around $7.00 per share) are crying in their beers as they exited the stock before the company soared with their Hunger Games, Saw, and Twilight franchises.

Lions Gate Entertainment Corp. (USA) (NYSE:LGF)Not reflected in the good numbers were two very good box office weekends in a row with $36.7 million coming in for “Warm Bodies” their zombie romantic comedy. Lest you think that number is disappointing the flick opened Super Bowl weekend and drew a lot of teenage girls away from the game. Not everything was champagne and roses with “Stand Up Guys,” too much like an extended Goodfellas Viagra ad, barely bringing in $1.5 million on Super Bowl Weekend. Lions Gate hit a 52 week high on February 11 before reporting, up 67.51% over the last year mainly on the success of Hunger Games and Twilight which pushed them over $1 billion in revenues for the first time.

Why They Beat

Lions Gate truly has its fingers on the teen pulse with its horror movies bringing in teen males, its Twilight and Warm Bodies bringing in teen females, and Hunger Games bringing in both. It has filled a niche the big studios would love to have filled. CEO Jon Feltheimer acknowledged this strength in the earnings release, “The quarter reflected not only the impact of our young adult franchises, but strong contributions from the rest of our theatrical releases and our home entertainment and international operations.”

Lions Gate is a small newcomer to entertainment, only sweet sixteen, but already it is the seventh most profitable film studio. Its success has been linked to its independent status which has allowed it to make controversial and less “commercial” type films like its first big time entry “American Psycho.” The company also owns an extensive movie library comprising over 13,000 titles including home viewing faves Dirty Dancing and the Rambo series.

Its television division has been a critical winner bringing to the small screen hits like Weeds, Mad Men, The Dead Zone, Nurse Jackie, and Tyler Perry shows. The company is also in the beginning stages of building its music studio.

Just The Numbers

The company, famous for the horror flicks it releases between blockbusters like Hunger Games and Twilight, scares investors even more with its 388.10 P/E and governance risks, high for Audit and the Board. The forward P/E for March 2014 drops to 14.01. Like its films it’s not for the faint-hearted. Nor is its debt load of $1.43 billion to total cash of $54.40 million.

With such a huge P/E one would think it would have an even larger short interest than 14.80%, although that’s high enough. The company keeps shocking the shorts with their boffo earnings and I expect the short interest will gradually dwindle.

Although the success of upcoming installments of Hunger Games and Twilight may get baked into the cake there are other catalysts like the home movie release of Twilight-Breaking dawn available March 2. With 24% of moviegoers between age 12 to 24 Lions Gate has a hungry audience and those aged 25-34 watch the most DVDs or on demand movies so Lions Gate has their custom, too with that extensive film library.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!