Why Lions Gate Entertainment (LGF) Stock Is Climbing Today

NEW YORK (TheStreet) -- Shares of Lions Gate Entertainment (LGF) are climbing 4.84% to $32.71, getting a lift after DreamWorks Animation (DWA) announced it is weighing its sale to Japanese telecommunications company Softbank Corp (SFTBF) .

Analysts at Wunderlich Securities speculated that Lion Gate could also be up for grabs, given the recent string of tax-inversion deals.

In its note today, the firm said shares of Lion Gate could be worth between $44 to $67 a piece.

Separately, 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 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 analysis by TheStreet Ratings Team goes as follows:

  • 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 5.77%.
  • 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 8.1%. 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.
  • You can view the full analysis from the report here: LGF Ratings Report

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