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Why Is Lions Gate (LGF.A) Up 44.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Lions Gate Entertainment (LGF.A - Free Report) . Shares have added about 44.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lions Gate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lionsgate Q2 Earnings Beat Estimates, Revenues Miss
Lionsgate reported second-quarter fiscal 2021 adjusted earnings of 33 cents per share that beat the Zacks Consensus Estimate by 65%. The company had reported earnings of 22 cents in the year-ago quarter.
However, revenues decreased 24.3% year over year to $745 million and missed the consensus mark by 3.2%.
Segment Details
Motion Picture (34.6% of revenues) revenues decreased 36.5% year over year to $257.6 million, primarily attributed to theatre closings related to the coronavirus pandemic, much similar to what Lionsgate’s peer Comcast (CMCSA - Research Report) experienced in the July-September quarter.
Notably, Comcast division NBCUniversal’s third-quarter Theatrical revenues plunged 94.7% from the year-ago quarter.
However, Lionsgate’s top line benefited from the resumption of film and television production. Markedly, film and television library revenues grew to $166.7 million in the reported quarter.
Moreover, the Motion Picture segment generated a profit of $83 million compared with $51 million in the year-ago quarter.
Television Production (26.5% of revenues) revenues declined 28% year over year to $197.2 million, primarily due to production schedule timings and episodic deliveries. Segment profit was $9.9 million, down 21.4% year over.
The Media Networks segment (52.1% of revenues), formed after the acquisition of Starz, reported revenues of $388.3 million, up 3.8% year over year, driven by increased revenues from STARZPLAY International. Segment profit declined 11.2% to $92.9 million.
Starz Networks revenues declined 0.3% year over year to $360.8 million. STARZPLAY International revenues in the quarter surged to $14.2 million from $4.4 million in the year-ago quarter. Streaming services revenues soared 72.7% year over year to $13.3 million.
At the end of the quarter, Starz Networks’ domestic OTT subscribers grew to 9.2 million. Global OTT subscribers (from STARZPLAY Arabia and PANTAYA) reached 13.7 million.
Operating Details
Lionsgate’s adjusted OIBDA grew 7.6% year over year to $156 million in the reported quarter.
Direct operating expenses, as a percentage of revenues, declined 150 basis points (bps) on a year-over-year basis to 49.2%.
Moreover, distribution and marketing expenses, as a percentage of revenues, fell 430 bps on a year-over-year basis to 22.4%.
However, general & administrative expenses, as a percentage of revenues, increased 520 bps year over year to 15.9%.
Operating income was $29.7 million in the reported quarter compared with $57.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2020, Lionsgate had cash and cash equivalents of $463.7 million compared with $376.1 million as of Jun 30, 2020.
Moreover, as of Sep 30, 2020, total film obligations and production loans amounted to $405.2 million compared with $388.7 million as of Jun 30, 2020.
Net cash flow from operating activities was $122 million at the end of the fiscal second quarter compared with $81.4 million at the end of the previous quarter and $181.2 million in the year-ago quarter.
Adjusted free cash flow was $113 million compared with free cash flow of $77 million in the previous quarter and $61.1 million in the year-ago quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Lions Gate has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Lions Gate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Lions Gate (LGF.A) Up 44.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Lions Gate Entertainment (LGF.A - Free Report) . Shares have added about 44.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lions Gate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lionsgate Q2 Earnings Beat Estimates, Revenues Miss
Lionsgate reported second-quarter fiscal 2021 adjusted earnings of 33 cents per share that beat the Zacks Consensus Estimate by 65%. The company had reported earnings of 22 cents in the year-ago quarter.
However, revenues decreased 24.3% year over year to $745 million and missed the consensus mark by 3.2%.
Segment Details
Motion Picture (34.6% of revenues) revenues decreased 36.5% year over year to $257.6 million, primarily attributed to theatre closings related to the coronavirus pandemic, much similar to what Lionsgate’s peer Comcast (CMCSA - Research Report) experienced in the July-September quarter.
Notably, Comcast division NBCUniversal’s third-quarter Theatrical revenues plunged 94.7% from the year-ago quarter.
However, Lionsgate’s top line benefited from the resumption of film and television production. Markedly, film and television library revenues grew to $166.7 million in the reported quarter.
Moreover, the Motion Picture segment generated a profit of $83 million compared with $51 million in the year-ago quarter.
Television Production (26.5% of revenues) revenues declined 28% year over year to $197.2 million, primarily due to production schedule timings and episodic deliveries. Segment profit was $9.9 million, down 21.4% year over.
The Media Networks segment (52.1% of revenues), formed after the acquisition of Starz, reported revenues of $388.3 million, up 3.8% year over year, driven by increased revenues from STARZPLAY International. Segment profit declined 11.2% to $92.9 million.
Starz Networks revenues declined 0.3% year over year to $360.8 million. STARZPLAY International revenues in the quarter surged to $14.2 million from $4.4 million in the year-ago quarter. Streaming services revenues soared 72.7% year over year to $13.3 million.
At the end of the quarter, Starz Networks’ domestic OTT subscribers grew to 9.2 million. Global OTT subscribers (from STARZPLAY Arabia and PANTAYA) reached 13.7 million.
Operating Details
Lionsgate’s adjusted OIBDA grew 7.6% year over year to $156 million in the reported quarter.
Direct operating expenses, as a percentage of revenues, declined 150 basis points (bps) on a year-over-year basis to 49.2%.
Moreover, distribution and marketing expenses, as a percentage of revenues, fell 430 bps on a year-over-year basis to 22.4%.
However, general & administrative expenses, as a percentage of revenues, increased 520 bps year over year to 15.9%.
Operating income was $29.7 million in the reported quarter compared with $57.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2020, Lionsgate had cash and cash equivalents of $463.7 million compared with $376.1 million as of Jun 30, 2020.
Moreover, as of Sep 30, 2020, total film obligations and production loans amounted to $405.2 million compared with $388.7 million as of Jun 30, 2020.
Net cash flow from operating activities was $122 million at the end of the fiscal second quarter compared with $81.4 million at the end of the previous quarter and $181.2 million in the year-ago quarter.
Adjusted free cash flow was $113 million compared with free cash flow of $77 million in the previous quarter and $61.1 million in the year-ago quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Lions Gate has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Lions Gate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.