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Will RealD (RLD)’s Earnings Finally Catch Up With Its Stock?

RealD (NYSE:RLD)On Thursday, RealD (NYSE:RLD) will release its latest quarterly results. With its stock having jumped sharply throughout the past year or so, investors should look closely to make sure its fundamentals are keeping up with its share price.

RealD (NYSE:RLD) has benefited from the rise of 3-D technology at movie theaters, with an increased willingness and demand for 3-D content not only for niche offerings but for blockbuster releases. Yet the company also has to face competition from a large and growing rival. Let’s take an early look at what’s been happening with RealD (NYSE:RLD) over the past quarter and what we’re likely to see in its report.

Stats on RealD

Analyst EPS Estimate ($0.19)
Year-Ago EPS $0.10
Revenue Estimate $42.97 million
Change From Year-Ago Revenue (14.1%)
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

How will RealD’s earnings fare this quarter?
Analysts have gotten a lot more optimistic in recent months about RealD (NYSE:RLD)’s earnings prospects, narrowing their March-quarter loss estimates by $0.06 per share and now anticipating a modest profit for the fiscal 2014 year. The stock has already gotten a head start on the turnaround celebration, jumping almost 30% since the end of February.

From RealD’s recent performance, investors who are new to the stock might be perplexed by the company’s weak revenue and earnings. When you look back to the company’s 2010 IPO, you’ll notice that the stock has actually come down quite a bit, as huge revenue growth in the company’s fiscal 2010 and 2011 years gave way to stagnant sales in 2012 and revenue declines this year. Given the rise of blockbuster action franchises that have brought in billions in box-office receipts for major movie companies, that trend is troubling for RealD. The decision from Sony Corporation (ADR) (NYSE:SNE) to stop subsidizing the 3-D glasses that viewers need to watch RealD versions of films as of a year ago was also a big contributor to RealD (NYSE:RLD)’s decline, as it put another barrier in front of would-be 3-D patrons. It also marked a big loss of confidence for RealD, as Sony Corporation (ADR) (NYSE:SNE) had formed a partnership with RealD years before RealD went public to develop 3-D projection equipment, and therefore Sony Corporation (ADR) (NYSE:SNE) had a vested interest in seeing RealD succeed as well.

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