How Will Lions Gate Entertainment (LGF) Stock React To Favorable Injunction Over Stolen ‘Expendables 3’?

NEW YORK (TheStreet) -- Lions Gate Entertainment (LGF) won a court order blocking websites from distributing an allegedly stolen copy of “The Expendables 3” viewed by more than 2 million people before the movie’s release in theaters, Bloomberg reports.

In Los Angeles, U.S. District Judge Margaret Morrow granted the company’s request August 8 for an injunction. A single digital file of the film was stolen and uploaded to the websites in late July, the company said in its complaint.

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The movie is scheduled for release August 15. The two predecessors in the “Expendables” franchise generated more than $575 million at the box office, the company said.

Operators of six websites including limetorrents.com and billionuploads.com haven’t responded to demands to stop disseminating the file, Lions Gate said.

Shares of Lions Gate Entertainment close up 7.51% to $32.62 on Friday.

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 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 13.60%.
  • 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 11.7%. 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

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