Lions Gate Entertainment (LGF) Is Weak On High Volume Today

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.

Trade-Ideas LLC identified Lions Gate Entertainment ( LGF) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Lions Gate Entertainment as such a stock due to the following factors:

  • LGF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.7 million.
  • LGF has traded 105,155 shares today.
  • LGF is trading at 2.07 times the normal volume for the stock at this time of day.
  • LGF is trading at a new low 3.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on LGF:

Lions Gate Entertainment Corp., an entertainment company, is engaged in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms, and international distribution and sales activities. The stock currently has a dividend yield of 0.8%. LGF has a PE ratio of 27.0. Currently there are 9 analysts that rate Lions Gate Entertainment a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Lions Gate Entertainment has been 1.1 million shares per day over the past 30 days. Lions Gate Entertainment has a market cap of $4.6 billion and is part of the services sector and media industry. The stock has a beta of 0.98 and a short float of 12.5% with 8.19 days to cover. Shares are up 7.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lions Gate Entertainment as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, expanding profit margins, growth in earnings per share 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 ratings report include:
  • 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 217.7% when compared to the same quarter one year prior, rising from $13.62 million to $43.26 million.
  • Net operating cash flow has significantly increased by 56.86% to -$12.63 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 5.71%.
  • 46.84% is the gross profit margin for LIONS GATE ENTERTAINMENT CP which we consider to be strong. 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 9.62% trails the industry average.
  • LIONS GATE ENTERTAINMENT CP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIONS GATE ENTERTAINMENT CP reported lower earnings of $1.02 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus $1.02).
  • LGF, with its decline in revenue, underperformed when compared the industry average of 8.0%. Since the same quarter one year prior, revenues fell by 21.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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