When Will Lions Gate Entertainment Corp. (NYSE:LGF.A) Turn A Profit?

By
Simply Wall St
Published
July 14, 2021
NYSE:LGF.A
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Lions Gate Entertainment Corp. (NYSE:LGF.A) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lions Gate Entertainment Corp. engages in film, television, subscription, and location-based entertainment businesses in Canada, the United States, and internationally. The US$3.8b market-cap company announced a latest loss of US$19m on 31 March 2021 for its most recent financial year result. As path to profitability is the topic on Lions Gate Entertainment's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Lions Gate Entertainment

According to the 13 industry analysts covering Lions Gate Entertainment, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$18m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 55%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NYSE:LGF.A Earnings Per Share Growth July 14th 2021

Underlying developments driving Lions Gate Entertainment's growth isn’t the focus of this broad overview, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Lions Gate Entertainment is its debt-to-equity ratio of 102%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Lions Gate Entertainment which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Lions Gate Entertainment, take a look at Lions Gate Entertainment's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

  1. Valuation: What is Lions Gate Entertainment worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Lions Gate Entertainment is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lions Gate Entertainment’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.