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Lions Gate Entertainment Corporation (LGF) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Lions Gate Entertainment Corporation ( LGF) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Lions Gate Entertainment Corporation as such a stock due to the following factors:

  • LGF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.1 million.
  • LGF has traded 6.5 million shares today.
  • LGF traded in a range 228.6% of the normal price range with a price range of $3.15.
  • LGF traded below its daily resistance level (quality: 142 days, meaning that the stock is crossing a resistance level set by the last 142 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on LGF:

Lions Gate Entertainment Corp., an entertainment company, engages in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms, and international distribution and sales activities. LGF has a PE ratio of 20.3. Currently there are 8 analysts that rate Lions Gate Entertainment Corporation a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Lions Gate Entertainment Corporation has been 1.6 million shares per day over the past 30 days. Lions Gate Entertainment has a market cap of $4.5 billion and is part of the services sector and media industry. The stock has a beta of 0.82 and a short float of 9.8% with 3.70 days to cover. Shares are up 105.8% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lions Gate Entertainment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Media industry and the overall market, LIONS GATE ENTERTAINMENT CP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 1675.00% to $139.86 million when compared to the same quarter last year. In addition, LIONS GATE ENTERTAINMENT CP has also vastly surpassed the industry average cash flow growth rate of 13.50%.
  • Compared to its closing price of one year ago, LGF's share price has jumped by 99.87%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • 47.51% is the gross profit margin for LIONS GATE ENTERTAINMENT CP which we consider to be strong. Regardless of LGF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.10% trails the industry average.
  • LIONS GATE ENTERTAINMENT CP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, LIONS GATE ENTERTAINMENT CP turned its bottom line around by earning $1.57 versus -$0.30 in the prior year.

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