Lions Gate Entertainment (LGF.A) Top Fourth Quarter Earnings and Revenue Estimates

Lions Gate Entertainment (LGF.A) posted quarterly earnings of $0.21 per share, beating Zacks consensus estimate of $0.01 per share. That compares to earnings of $0.06 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a 2,000% earnings surprise. A quarter ago, this film producer and distributor was expected to post a loss of $0.02 per share when it was actually producing a profit of $0.26, offering a surprise $1,400 %.

In the past four quarters, the company has exceeded consensus EPS estimates three times.

Lions Gate, which is owned by Zacks’ film and television production and distribution industry, reported revenue of $1.09 billion for the three months ended March 2023, beating the consensus estimate of Zacks of 11.37%. That compares to revenues of $929.9 million a year ago. The company has exceeded consensus revenue estimates three times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Lions Gate shares are up about 82.5% year-to-date compared to the S&P 500’s 7.2% gain.

What’s next for Lions Gate?

As Lions Gate has outperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend of estimate revisions for Lions Gate is mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 3 (hold) ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.07 on $1.02 billion in revenue for the upcoming quarter and $0.42 on $4.19 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, film and television production and distribution currently sits in the bottom 22% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in Zacks’ broader consumer discretionary sector, Lululemon (LULU), has yet to report results for the quarter ending April 2023. Results are expected to be released on June 1.

This sportswear maker is expected to post quarterly earnings of $1.97 per share in its next report, representing a year-over-year change of +33.1%. The consensus EPS estimate for the quarter has been revised upwards by 1.7% in the past 30 days from the current level.

Lululemon’s revenue is expected to be $1.92 billion, up 19.3% from the year-ago quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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