Why Lions Gate Entertainment (LGF) Stock Is Up Today

NEW YORK (TheStreet) -- Lions Gate Entertainment (LGF) was gaining 5.3% to $31.25 Wednesday after announcing a long-term output agreement with Roadshow Films in Australia.

The output agreement includes The Hunger Games: Mockingjay -- Parts 1 & 2, which are scheduled to release in November 2014 and November 2015, respectively. The agreement extends an existing partnership which helped distribute the first two Hunger Games movies to theaters in Australia, one of the top three international territories for both movies.

"We're pleased to extend our relationship with one of the premier distributors in Australia and delighted to bring them the most exciting feature film slate in our Company's history," Lionsgate Motion Picture Group Co-Chairs Patrick Wachsberger and Rob Friedman and Lionsgate International COO Andrew Kramer said in a press release. "Our portfolio of tentpole franchises, potential franchises and star-driven event films will create tremendous opportunities for both companies in Australia in the years to come."

Must read: Warren Buffett's 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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 several positive factors, 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 good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • Net operating cash flow has significantly increased by 84.37% to $106.68 million when compared to the same quarter last year. In addition, LIONS GATE ENTERTAINMENT CP has also vastly surpassed the industry average cash flow growth rate of 5.49%.
  • 44.09% is the gross profit margin for LIONS GATE ENTERTAINMENT CP which we consider to be strong. Regardless of LGF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.80% trails the industry average.
  • LGF, with its decline in revenue, underperformed when compared the industry average of 14.6%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness 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.
  • Although LGF's debt-to-equity ratio of 2.82 is very high, it is currently less than that of the industry average.
  • You can view the full analysis from the report here: LGF Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

More from Markets

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Dow Falls, S&P 500 Lower as Amazon Rises, Apple and P&G Slump

Dow Falls, S&P 500 Lower as Amazon Rises, Apple and P&G Slump

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'