Why LionsGate (LGF) Is Gaining on Monday

NEW YORK (TheStreet) -- LionsGate (LGF) is climbing higher on Monday after Divergent, its film based on the bestselling young-adult trilogy, dominated the weekend box office.

By midafternoon, shares had added 4.3% to $28.78.

Trading volume of 5.2 million is more than double its three-month daily average of 2.2 million.

The movie, the first of three in the series, generated $56 million in domestic ticket sales over the weekend, in line with forecasts for between $50 million and $68 million for its opening weekend at U.S. and Canadian theaters.

Though its opening was nearly a third of what the first film in The Hunger Games franchise generated over the same period, the strong start was enough for the studio to greenlight the film's sequel Insurgent, which is slated for release in March 2015.

"We're off to a great start with strong numbers from all regions of the country, urban, suburban and rural alike," CEO Jon Feltheimer said in a statement on Friday. "We're confident that Divergent is on its way to becoming another important franchise for us."

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TheStreet Ratings team rates LIONS GATE ENTERTAINMENT CP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate LIONS GATE ENTERTAINMENT CP (LGF) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LGF's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 118.51% and other important driving factors, this stock has surged by 31.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • LIONS GATE ENTERTAINMENT CP 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 two years. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 134.6% when compared to the same quarter one year prior, rising from $37.83 million to $88.76 million.
  • 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.

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