Lions Gate Earnings: Margins Suffer, Shares Tumble

Lions Gate Entertainment Corp. (NYSE:LGF) reported a drop to a loss in the fourth quarter driven by higher costs. Lions Gate Entertainment is engaged in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand, and digitally delivered content.

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Lions Gate Entertainment Corp. Earnings Cheat Sheet

Results: Reported a loss of $22.7 million (17 cents per diluted share) in the quarter. Lions Gate Entertainment Corp. had a net income of $48.7 million or 34 cents per diluted share in the year-earlier quarter.

Revenue: Rose 71.2% to $645.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Lions Gate Entertainment Corp. fell short of the mean analyst estimate of 19 cents per share. It beat the average revenue estimate of $618.8 million.

Quoting Management: “Fiscal 2012 was a milestone year with the acquisition of Summit Entertainment, the rollout of our record-breaking film THE HUNGER GAMES, continued growth in library revenues and the increasing profitability of our diversified television business,” said Lionsgate Chief Executive Officer Jon Feltheimer. “With substantially all of the profitability of the first HUNGER GAMES film and this November’s release of THE TWILIGHT SAGA: BREAKING DAWN – PART two still ahead of us, we have great visibility and have set the stage for anticipated strong EBITDA, free cash flow and earnings in the years ahead.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 4.1 percentage points to 44.1% from the year-earlier quarter. Over that time, margins have contracted on average 7.4 percentage points per quarter on a year-over-year basis.

A year-over-year revenue increase last quarter snaps a streak of four consecutive quarters of revenue declines. The worst quarter in that span was the third quarter, which saw a 23.6% decrease.

The company has now fallen short of estimates in the last two quarters. In the third quarter, it missed expectations by 10 cents with a loss of one cent versus a mean estimate of net income of 9 cents per share.

Looking Forward: The average estimate for the first quarter of the next fiscal year has risen from a loss of one cent per share ninety days ago to a profit of 24 cents, indicating that analysts are optimistic about the company’s performance next quarter. At a profit of 10 cents per share, the average estimate for the fiscal year has risen from an expected loss of one cent ninety days ago.poration.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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