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What's Up for Lions Gate Entertainment's (LGF) Q4 Earnings?

Lions Gate Entertainment Corp. LGF.A, producer and distributor of motion pictures for theatrical and straight-to-video release, is scheduled to report fourth-quarter fiscal 2017 results on May 25, 2017, after the closing bell.  

Last quarter, the company delivered a positive earnings surprise of 10.0%. It has surpassed the Zacks Consensus Estimate in three of last four quarters, with an average earnings beat of 213.3%. Let’s see how things are shaping up for this announcement.

What to Expect?

The question lingering in the investors’ minds now is whether Lions Gate Entertainment will be able to come up with a positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 33 cents, reflecting a year-over-year increase of nearly 27%.

We note that the Zacks Consensus Estimate has been stable over the past 30 days. Analysts polled by Zacks, expect revenues of $1,202 million compared with the $791 million reported in the prior-year quarter.

The stock has underperformed the Zacks categorized Movie/TV-Production/Distribution industry and the S&P 500 in the past six months. The company’s shares have declined 46.2%, compared with the Zacks categorized industry’s fall of 4.7%. However, the S&P 500 has witnessed an increase of 8.2%.

Factors Influencing the Quarter

Lions Gate’s Television segment looks robust. In third-quarter fiscal 2017, Television Production revenues jumped 39% to $229 million, driven mostly due to a rise in television deliveries, which includes episodes of Orange is the New Black, the new series Dear White People and the three-hour musical event, Dirty Dancing.

However, the escalating cost of motion picture production and marketing in recent years may jeopardize Lions Gate’s margins. The persistence of this trend will leave no other option for the company but to depend more on lower revenue-generating alternatives such as home video and television, which may not suffice to offset the production-cost. Additionally, intensifying currency headwinds might weigh on its performance.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Lions Gate is likely to beat on earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Lions Gate has an Earnings ESP of +18.18% as the Most Accurate estimate stands at 39 cents, while the Zacks Consensus Estimate is pegged lower at 33 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lions Gate carries a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy Co., Inc. BBY has an Earnings ESP of +10.00% and a Zacks Rank #2. You cansee the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. BURL has an Earnings ESP of +2.86% and a Zacks Rank #2.

Ulta Beauty, Inc. ULTA has an Earnings ESP of +0.56% and a Zacks Rank #2.

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Lions Gate Entertainment Corporation (LGF.A): Free Stock Analysis Report
 
Best Buy Co., Inc. (BBY): Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL): Free Stock Analysis Report
 
Ulta Beauty Inc. (ULTA): Free Stock Analysis Report
 
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