NEW YORK (
-- Dreamworks Animation SKG
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.
Highlights from the ratings report include:
- Net operating cash flow has significantly decreased to -$44.19 million or 821.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for DREAMWORKS ANIMATION INC is currently lower than what is desirable, coming in at 34.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.10% trails that of the industry average.
- DREAMWORKS ANIMATION INC has exprienced 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 reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DREAMWORKS ANIMATION INC increased its bottom line by earning $1.97 versus $1.74 in the prior year. For the next year, the market is expecting a contraction of 12.4% in earnings ($1.73 versus $1.97).
- The revenue fell significantly faster than the industry average of 4.6%. Since the same quarter one year prior, revenues fell by 33.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market on the basis of return on equity, DREAMWORKS ANIMATION INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
DreamWorks Animation SKG, Inc. engages in the development, production, and exploitation of animated feature films and characters worldwide. It provides animated feature films and characters for the theatrical, home entertainment, television, and merchandising and licensing markets. The company has a P/E ratio of 13.7, equal to the average media industry P/E ratio and below the S&P 500 P/E ratio of 16.7. Dreamworks Animation SKG has a market cap of $2 billion and is part of the
industry. Shares are down 9.3% year to date as of the close of trading on Tuesday.
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