A Fresh Look at Lionsgate (LION) Valuation as Shares Climb 11% in Recent Weeks

Lionsgate Studios (LION) stock is drawing attention as investors track its performance over the past month, with shares up 11%. The entertainment company's numbers come at a time when media stocks are seeing mixed momentum.

See our latest analysis for Lionsgate Studios.

Lionsgate Studios’ 11% rise in share price over the past month has come after a mixed start to the year, with longer-term total shareholder return still in positive territory. The latest price swings suggest momentum is picking up as investors keep a close eye on changing risks and potential catalysts.

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With shares up in recent weeks but still trading at a notable discount to analyst targets, the question now is whether Lionsgate Studios remains undervalued or if the market has already priced in its future growth prospects.

Most Popular Narrative: 20.2% Undervalued

Lionsgate Studios’ widely followed narrative sees fair value well above the last close, suggesting the stock’s recovery may have further room to run. This also indicates that current pricing does not fully reflect the company’s outlined transformation and expected future profit turn.

Lionsgate is leveraging its franchise-building strategy to expand popular IPs (Hunger Games, John Wick, Saw, Twilight) across film, TV, animation, games, virtual experiences, and live shows. The company is tapping into the growing demand for multi-platform, cross-medium content and creating new recurring revenue streams, which is expected to drive top-line revenue growth and provide greater earnings visibility.

Read the complete narrative.

Want to know what assumptions power this bullish view? The narrative’s projected profit turnaround relies on highly ambitious growth for new media and a dramatic reversal in margins. What’s the single controversial financial projection analysts are betting on? See the numbers that underpin a tech-level future value, and decide if you agree with the blueprint.

Result: Fair Value of $8.61 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Lionsgate Studios remains vulnerable to unpredictable box office results and pressure from much larger global competitors. Both of these factors could upset this outlook.

Find out about the key risks to this Lionsgate Studios narrative.

Another View: Discounted Cash Flow Model Puts a Different Spin on Value

While the fair value estimate points to Lionsgate Studios being undervalued, our SWS DCF model reaches a very different conclusion. According to this approach, the current share price of $6.87 actually sits above an estimated fair value of $4.48. This flips the script: could the market already be pricing in all the positive catalysts, or is DCF too conservative for a business like this?

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 870 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lionsgate Studios Narrative

If you see the numbers differently or want to dig deeper into the story, you can shape your own view in just a few minutes, and Do it your way.

A great starting point for your Lionsgate Studios research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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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