NEW YORK (TheStreet) -- Shares of DreamWorks Animation SKG (DWA) are up 1.16% to $20.86 in midday trading Tuesday, a few hours ahead of the entertainment company's fourth quarter earnings release after the market closes.
For the fourth quarter, analysts are expecting a loss of $3.01 per share, worse than the loss of $2.75 it posted in the same period of last year.
Revenue for the quarter is expected to come in at $246.17 million, higher compared to the $204.28 million DreamWorks reported a year earlier.
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CEO Jeffrey Katzenberg has made some attempts to stop the company's bleeding from high costs and disappointing revenue.
Last month, Katzenberg said the company plans to fire 500 workers, or about 18%, of its workforce. He also said it's lowering the number of films it will produce each year to cut costs further.
The restructuring is expected to generate about $60 million in annual savings by 2017.
Glendale, CA-based DreamWorks Animation SKG is primarily engaged in the development, production and exploitation of animated films across the theatrical, home entertainment, digital, television, merchandising, and licensing markets.
The company operates in three segments including feature films, television series, and consumer products.
Separately, TheStreet Ratings team rates DREAMWORKS ANIMATION INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DREAMWORKS ANIMATION INC (DWA) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$74.21 million or 246.24% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- DWA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 36.34%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Media industry average, but is greater than that of the S&P 500. The net income increased by 18.5% when compared to the same quarter one year prior, going from $10.06 million to $11.93 million.
- 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, DREAMWORKS ANIMATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 42.65% is the gross profit margin for DREAMWORKS ANIMATION INC which we consider to be strong. Regardless of DWA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DWA's net profit margin of 6.59% is significantly lower than the industry average.
- You can view the full analysis from the report here: DWA Ratings Report