Lionsgate Studios (LION): Exploring Valuation Perspectives After Recent Earnings Momentum

Lionsgate Studios (LION) stock has been attracting some renewed interest lately, particularly after its recent earnings report. Investors are weighing how the company’s strategy might influence results in the months ahead, especially as streaming dynamics continue to shift.

See our latest analysis for Lionsgate Studios.

After a turbulent start to the year, Lionsgate Studios’ share price has recently shown some signs of momentum, climbing 12.35% over the past month and 5.40% in the last quarter, despite being down nearly 15% year-to-date. Over the long run, though, shareholders have seen an 8.7% total return in the last year, outpacing the broader media sector. Its 3-year total return sits above 20%, even as the 5-year figure remains in the red. Altogether, it appears that investor sentiment is warming as the company resets post spin-off and pursues opportunities in a rapidly changing media environment.

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With shares still trading well below analyst targets and despite recent gains, the key question remains: Is Lionsgate Studios undervalued at current levels, or are investors already pricing in the company’s future growth potential?

Most Popular Narrative: 22.9% Undervalued

Lionsgate Studios closed at $6.64, but the most widely followed narrative suggests the fair value is closer to $8.61. This sets the stage for a lively debate, given the significant gap between perception and target.

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 bold assumptions underpin this ambitious valuation? The secret sauce is blockbuster growth drivers and a margin turnaround few are watching. What do analysts expect to change, and why is profit potential the hot topic? Find the full narrative for the clues behind the number that’s turning heads.

Result: Fair Value of $8.61 (UNDERVALUED)

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

However, if major releases miss expectations or if there is a shift in audience demand to interactive media, the bullish outlook for Lionsgate Studios could be quickly challenged.

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

Another View: SWS DCF Model’s Perspective

While analyst consensus suggests Lionsgate Studios is undervalued, our SWS DCF model presents a very different picture and estimates fair value at just $3.84 per share. This suggests the stock could be overvalued by a significant margin based on future cash flows. Which forecast does the market ultimately believe?

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 885 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 story differently or want to dig into the numbers hands-on, it only takes a few minutes to build your own perspective, 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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