Lions Gate Entertainment (LGF) Marked As A Barbarian At The Gate

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 "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) 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 $54.6 million.
  • LGF has traded 2.5 million shares today.
  • LGF traded in a range 208.7% of the normal price range with a price range of $2.11.
  • LGF traded above its daily resistance level (quality: 398 days, meaning that the stock is crossing a resistance level set by the last 398 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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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 24.2. 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 1.4 million shares per day over the past 30 days. Lions Gate Entertainment has a market cap of $4.7 billion and is part of the services sector and media industry. The stock has a beta of 0.85 and a short float of 18.5% with 9.16 days to cover. Shares are up 5.5% year-to-date as of the close of trading on Wednesday.

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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 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 ratings report include:
  • 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.

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

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