Tags: Lionsgate | entertainment | ticket | LGF

Is Lionsgate Entertainment Worth the Ticket?

By Tim Plaehn   |   Friday, 21 Oct 2011 10:50 AM

Movie and television production company Lionsgate Entertainment (LGF) is arguably one blockbuster movie away from making investors a very nice profit. In the meantime, lackluster ticket sales of the company's movie releases are keeping the share price in line with the average matinee ticket price.

Lionsgate has produced TV shows such as Mad Men. Recent movie releases including Conan and The Expendables. The company earns revenues from a portion of box office ticket sales, DVD sales, revenues from television networks and use agreements with companies like Netflix (NFLX). Also in the portfolio are The TV Guide Network and TV Guide.com.

Lionsgate earnings results for the last year aptly show the ups and downs of the entertainment business. Earnings per quarter starting with the 2010 second quarter were: a loss of 22 cents, loss of 4 cents, profit of 33 cents, and a profit of 9 cents, respectively. For the third and fourth quarters of 2011, the consensus estimates are a loss of 7 cents and profit of 8 cents per share.

Fighting Icahn

In September, activist shareholder Carl Icahn, who had been buying up shares with a goal of controlling the company, agreed to sell his 44 million shares to investors chosen by Lionsgate management.

The company had been spending close to $50 million per year to fight Icahn’s advances. Having a potential hostile takeover out of the picture may allow management to focus on pictures which bring money to the bottom line. An investor should value this company based on the projects in the works and whether there is a case for big box-office hits to come.

Lionsgate Entertainment investor relations information emphasizes the fact that company revenues have grown to $1.6 billion from $180 million over a decade. Nevertheless, the share price is where it was in 2004.

The most recent analyst report comes from RBC Capital Markets analysts, who maintained their market perform rating on the stock. Slightly earlier analysis from Wunderlich Securities reiterated a buy rating on LGF.

The company next reports on Nov. 8.


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Movie and television production company Lionsgate Entertainment (LGF) is arguably one blockbuster movie away from making investors a very nice profit. In the meantime, lackluster ticket sales of the company's movie releases are keeping the share price in line with the...
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