Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Lions Gate Entertainment Corp. (USA) (LGF): Too Late for This Blockbuster Party. Really?!

Page 1 of 2

Jim Cramer told Mad Money viewers on May 31 that anyone buying Lions Gate Entertainment Corp. (USA) (NYSE:LGF) now was “late to the party.” While the huge moves have been made, so far this year, the stock has almost doubled from $16 to $30, he also said he couldn’t see it pulling back soon. Which is it, Mr. Cramer, buy or sell?

Lions Gate Entertainment Corp. (USA) (NYSE:LGF)

Break out the bubbly

Cramer’s right that the huge earnings surprises that drove up the stock and squeezed the shorts aren’t in the picture. The short interest has decreased to 12% from February’s 14.70%. It’s also true the stock rose over 6% after a stellar earnings report last week.

The jumbo shrimp may be all gone, but analysts still expect another serving of bubbly with 22.93% EPS growth over the next five years. They are bullish with four Strong Buys, seven Buys, and one Hold.

The PEG ratio for Lions Gate Entertainment Corp. (USA) (NYSE:LGF) is at 0.90, signifying that it is slightly undervalued. The forward P/E is 16.94. Its trailing P/E is half that of Sony Corporation (ADR) (NYSE:SNE)‘s 37.44 at 17.92 and is historically low for Lions Gate Entertainment Corp. (USA) (NYSE:LGF). Before reporting in February, its trailing P/E was 388.10 and in March it was at 78.

“Catching Fire”, the second installment of the teen dystopia Hunger Games trilogy comes out November 22. The PR machine is full steam ahead so is now the time to buy in? The movie has a dedicated fashion blog site as well as other participatory blogs and fan sites.The fashion blog is easily as slick as any designer website, i.e. Gucci or Prada.

Interestingly, this time around major corporations like The Procter & Gamble Company (NYSE:PG) are hoping people will buy into the hype as it is releasing a Cover Girl cosmetics line based on Catching Fire. This can only be good news for Lions Gate Entertainment Corp. (USA) (NYSE:LGF)… less money they have to spend on PR.

Lions Gate Entertainment Corp. (USA) (NYSE:LGF) will inevitably draw headlines in the months ahead like, “This stock is really Catching Fire”, har de har har, but there’s going to be truth in that. Just last weekend, their film “Now You See Me”, a small ensemble film about magicians performing big time heists, outperformed what was supposed to be a Will Smith blockbuster for Sony Corporation (ADR) (NYSE:SNE), “After Earth.” Now You See Me brought in $1.1 million more than After Earth in their opening weekends. Who said people don’t like magic acts?

With $28.1 million from the opening weekend and $55 million in foreign rights, Lions Gate has almost recouped its production costs of $70 million. Sony spent $130 million on After Earth. Not much of a party over at Sony right now.

Analysts are giving Sony a price target of $25.62 for more than 25% upside, and it does have a 1.50% yield. But the stock swooned over 5% after the disappointing box office numbers for After Earth.

In other good news, Lions Gate CEO Jon Feltheimer has signed a long-term agreement to stay on. He has been critical to helping Lions Gate achieve over $1 billion in revenue this last year and reporting its first ever annual profit at the earnings release last week.

Another bullet point for Lions Gate is that activist investor Carl Icahn moved on last year leaving millions on the table as Hunger Games went on to become a teen cult favorite and the stock quadrupled. Mark Cuban also left the party too early. Meanwhile, Sony is dealing with activist investor Dan Loeb who wants to break up the company.

Late to the party. Really?

That said, although in January Forbes wrote that Catching Fire was the most anticipated film of 2013, its foreign sales wouldn’t  be anything to write home about. That honor would go to Iron Man 3.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!