NEW YORK (
TheStreet)
-- Dreamworks Animation SKG (Nasdaq:
DWA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- DWA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- 38.90% is the gross profit margin for DREAMWORKS ANIMATION INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.10% is above 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. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, DREAMWORKS ANIMATION INC reported lower earnings of $1.02 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $1.02).
- The revenue fell significantly faster than the industry average of 19.2%. Since the same quarter one year prior, revenues fell by 20.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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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 11.2, equal to the average media industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Dreamworks Animation SKG has a market cap of $1.6 billion and is part of the
services sector and
media industry. Shares are up 18.4% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet RatingsStaff
