Spin Master Corp.’s announcement of Lionsgate Studios (LION) as a collaborator on its Hellbreak horror trading card game has drawn fresh attention to the studio’s intellectual property and licensing reach.
See our latest analysis for Lionsgate Studios.
At a share price of $13.47, Lionsgate Studios has recently given back some momentum, with the 7 day share price return down 8.12% and the 30 day share price return down 5.94%. However, the 90 day share price return of 21.68% and 1 year total shareholder return of 92.43% point to a stock that has still rewarded patient holders even as sentiment cools in the short term.
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After such a strong 1 year run, a recent pullback, ongoing net losses and a market value of about US$3.9b, does the current setup at Lionsgate Studios still tilt the risk reward balance toward new buyers or toward caution?
Most Popular Narrative: 32.6% Undervalued
With Lionsgate Studios last closing at $13.47 against a narrative fair value of $20.00, the current pricing sits well below what the most followed thesis is working with.
The ramp-up of experiential and interactive franchise extensions, including virtual experiences, Broadway shows, live entertainment venues, and gaming, positions Lionsgate to capture outsized share of the booming next-generation entertainment economy, substantially expanding the revenue base beyond box office and streaming and driving robust, diversified earnings growth.
Want to see what sits behind that confidence in Lionsgate Studios? The narrative focuses on faster top line growth, improving margins and a richer earnings multiple. Curious which specific earnings path and valuation bridge justify that fair value.
Result: Fair Value of $20.00 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Lionsgate Studios still carries meaningful risks, including reliance on hit driven content and debt levels that could weigh on cash flow if projects underperform.
Find out about the key risks to this Lionsgate Studios narrative.
Another View on Lionsgate Studios Valuation
While the most followed narrative works with a fair value of $20.00, Simply Wall St's DCF model points in the opposite direction, with Lionsgate Studios at $13.47 trading above an estimated future cash flow value of $12.21. That suggests the stock screens as overvalued on this framework. Which story do you feel more comfortable with?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lionsgate Studios for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 45 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With sentiment clearly split on Lionsgate Studios and its fair value, it makes sense to review the numbers, risks and rewards yourself and then weigh up the 2 key rewards and 1 important warning sign
Looking for more investment ideas beyond Lionsgate Studios?
If you like the kind of setup Lionsgate Studios presents, do not stop there. Broaden your watchlist now so you are not chasing the next opportunity after it has already moved.
- Spot potential turnaround stories early by scanning 20 elite penny stocks with strong financials, which already show stronger fundamentals than the typical speculative micro cap.
- Zero in on quality at a discount by reviewing the 45 high quality undervalued stocks, which combine solid cash flows with more modest pricing.
- Strengthen the defensive side of your portfolio by assessing companies in the 78 resilient stocks with low risk scores, which screen with more resilient profiles.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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