NEW YORK (TheStreet) -- Shares of Lions Gate Entertainment (LGF) are up 2.80% to $34.85 in pre-market trade after it was reported that Dalian Wanda Group Co., which controls the second-biggest U.S. cinema chain, is in talks to acquire a stake in the film studio, billionaire chairman Wang Jianlin said, according to Bloomberg.
The Beijing-based company is interested in buying control of Lions Gate, the $4.7 billion studio behind the "Hunger Games" films, although its owners have only been willing to sell a minority stake, Wang said in an interview with Bloomberg.
Talks are at an early stage and may not lead to a deal, he said. Wanda has also held discussions about investing in Metro-Goldwyn-Mayer Inc., the independent producer of James Bond films, Wang said.
Wang also said he wants to acquire large theater networks in Europe as part of his ambition to control 20% of the global cinema market by 2020.
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 revenue growth, increase in stock price during the past year, increase in net income, expanding profit margins and notable return on equity. 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:
- LGF's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 10.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- This stock has managed to rise its share value by 6.98% over the past twelve months. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past 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 4015.0% when compared to the same quarter one year prior, rising from $0.51 million to $20.78 million.
- LIONS GATE ENTERTAINMENT CP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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 ($1.59 versus $1.02).
- 44.58% 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 3.75% trails the industry average.
- You can view the full analysis from the report here: LGF Ratings Report