Why Lions Gate Entertainment (LGF) Stock Is Down

NEW YORK (TheStreet) -- Shares of Lions Gate Entertainment Corp. (LGF) are down -6.26% to $27.68 in after-hours trading following the entertainment company's release of its fourth quarter earnings ended March 31.

The company reported earnings of $49.2 million, or 35 cents per share, well below Wall Street estimates of 40 cents per share, according to Variety.

Quarterly profits declined 70% from earnings of $163 million in the year-ago period.

Revenues were $721.9 million, down 8% from the year-ago quarter's $785.7 million.

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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 some important positives, 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 impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and expanding profit margins. 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:

  • 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.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.9%. 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.
  • 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.
  • The gross profit margin for LIONS GATE ENTERTAINMENT CP is rather high; currently it is at 52.67%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.56% trails the industry average.
  • You can view the full analysis from the report here: LGF Ratings Report

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