Assessing Lionsgate (LION) Valuation After a 10% Share Price Rebound This Month

Lionsgate Studios (LION) shares have returned 10% in the past month, catching some interest in the media sector. Investors are watching closely to see whether recent momentum will continue, especially given the challenging year to date performance.

See our latest analysis for Lionsgate Studios.

Lionsgate Studios has seen a notable shift recently, with its share price rebounding 10.05% over the past month after a sluggish start to the year. While the year-to-date share price return is still negative, the recent rally hints at growing optimism or changing sentiment among investors. Over the longer term, total shareholder return remains positive, suggesting momentum could be picking up pace.

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The question now facing investors is whether growing optimism means Lionsgate Studios is undervalued at current levels, or if recent gains have already factored in expectations for future growth. Is there still a buying opportunity here, or has the market already priced in the rebound?

Most Popular Narrative: 17.3% Undervalued

According to the most popular narrative, Lionsgate Studios appears attractively priced, with its fair value estimate sitting well above the current share price. This provides a sharp contrast to recent price action and positions the company as a potential opportunity for further upside if the projections play out as expected.

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. This taps into the growing demand for multi-platform, cross-medium content and creates new recurring revenue streams, which is expected to drive top-line revenue growth and provide greater earnings visibility.

Read the complete narrative.

Wondering what’s fueling this bullish outlook? The secret lies in aggressive profit turnaround forecasts, surging margins, and ambitious growth assumptions. See the full narrative to uncover the surprising numbers that underlie this potential value gap.

Result: Fair Value of $8.61 (UNDERVALUED)

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

However, persistent box office unpredictability or increased competition from larger streaming players could undermine Lionsgate Studios' earnings momentum and future market share gains.

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

Another View: Relative Value Signals

Looking beyond fair value estimates, Lionsgate Studios trades at a price-to-sales ratio of just 0.5x. This is not only well below the US Entertainment industry average (1.3x), but also lower than the peer average (2.8x) and its fair ratio of 0.7x. Such a wide gap suggests investors are cautious, but it might also signal untapped opportunity. Could the market be too skeptical about Lionsgate's turnaround?

See what the numbers say about this price — find out in our valuation breakdown.

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 921 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 have a different perspective or want to dive deeper yourself, you can build your own Lionsgate Studios story in just a few minutes with 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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