Starz Entertainment shares closed at US$22.11 on Friday, up 1.7% on the day, even though the latest 90 day return is down about 15%. Traders liked the headline that Q3 2026 brought in US$322.4 million of revenue and delivered US$44 million of adjusted operating income before depreciation and amortization, beating internal expectations.
The short term bounce only tells part of the story. Management is leaning hard on that adjusted profit line and unlevered free cash flow of US$19 million as proof that the long term plan to grow margins and cut leverage is starting to show through the quarterly noise.
Love that Starz Entertainment beat its own profit targets but uneasy about how thin that US$19 million cash cushion looks against recent share price volatility? Take a look at our list of companies with stronger balance sheets and consistent free cash flow in the list of solid balance sheet and fundamentals stocks (25 results)
Q3 2026 Earnings Summary
- Revenue (Q3 2026 vs. Q3 2025): US$322.4 million vs. US$320.9 million (modest top line improvement)
- Net Income (Q3 2026 vs. Q3 2025): loss of US$34.8 million vs. loss of US$52.6 million (year on year loss narrowed)
- Basic EPS (Q3 2026 vs. Q3 2025): loss of US$2.02 per share vs. loss of US$3.15 per share (per share loss reduced)
- Adjusted Operating Income Before Depreciation and Amortization (OIBDA, Q3 2026): US$44 million compared with the internal plan (came in ahead of management expectations)
Starz just logged its strongest revenue quarter of the year. Ask Charlie what makes Starz so confident in 2027 targets.
Starz thesis on subscriber quality meets early tests
The bullish pitch for Starz Entertainment rests on better customers, not just more of them.
"The main thing that has to go right is that Starz Entertainment successfully executes on lower cost owned IP while keeping churn low and ARPU growing through pricing discipline and bundled distribution deals."
Q3 results show pieces of that plan appearing in the numbers. OTT revenue reached US$227 million with low single digit year on year gains and sequential growth, while management cited record low churn and higher ARPU. Owned titles like Fightland are already generating co commission and licensing revenue, and unlevered free cash flow of US$19 million plus leverage at 2.8x suggests the early content and pricing shift is funding itself, at least this quarter.
One Narrative disagrees with today's price. → See where this Narrative says Starz Entertainment should trade.
Starz bearish cash flow worries not fully cleared
Critics worry that Starz Entertainment is funding owned content against a shrinking linear base and that near term cash outflows will keep pressure on profitability.
"This can keep pressure on net margins and earnings if audience performance or downstream deals fall short."
Q3 shows some pushback to that concern. Unlevered free cash flow moved to US$19 million and content cash spend stayed within the sub US$600 million target, while leverage sat at 2.8x with an interest bill set to ease after refinancing. The drag on reported net income remains, so the bear case on accounting margins is not disproved yet.
Hunt For Quiet Mispricings Now
Starz Entertainment just reported a quarter that reshaped how investors interpret its narrative. The real opportunity could be spotting stocks that could be undervalued before expectations reset.
- Company 1 - 38% below our estimate - uses device trade-in programs and refurbishment technology to convert recycling policies into recurring recommerce activity.
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Those are three of them. See the full list of 30 companies trading below our fair value estimates →
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