Lions Gate Entertainment Corp. (NYSE:LGF.A) shareholders will doubtless be very grateful to see the share price up 37% in the last quarter. But over the last three years we've seen a quite serious decline. Indeed, the share price is down a tragic 67% in the last three years. So it is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.
Because Lions Gate Entertainment made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years, Lions Gate Entertainment's revenue dropped 2.1% per year. That's not what investors generally want to see. The share price decline of 19% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Having said that, if growth is coming in the future, now may be the low ebb for the company. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Lions Gate Entertainment is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Lions Gate Entertainment in this interactive graph of future profit estimates.
A Different Perspective
Lions Gate Entertainment produced a TSR of 9.4% over the last year. Unfortunately this falls short of the market return of around 17%. The silver lining is that the recent rise is far preferable to the annual loss of 19% that shareholders have suffered over the last three years. We hope the turnaround in fortunes continues. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Lions Gate Entertainment (1 is a bit unpleasant!) that you should be aware of before investing here.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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