NEW YORK (TheStreet) -- Dreamworks (DWA) has been upgraded to "buy" from "neutral" at B. Riley with a $37 price target. The firm said Dreamworks' film slate is shifting toward the company's core franchises over the next 12 to 18 months.
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Separately, TheStreet Ratings team rates DREAMWORKS ANIMATION INC as a Hold with a ratings score of C+. The team has this to say about their recommendation:
"We rate DREAMWORKS ANIMATION INC (DWA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DWA's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- DREAMWORKS ANIMATION INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DREAMWORKS ANIMATION INC turned its bottom line around by earning $0.65 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus $0.65).
- DWA, with its decline in revenue, underperformed when compared the industry average of 4.2%. Since the same quarter one year prior, revenues fell by 22.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for DREAMWORKS ANIMATION INC is currently lower than what is desirable, coming in at 31.81%. Regardless of DWA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.41% trails the industry average.
- Net operating cash flow has significantly decreased to -$43.45 million or 34381.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: DWA Ratings Report