DreamWorks Posts Narrower Loss on Revs Beat - Analyst Blog

DreamWorks Animation SKG Inc. DWA reported financial results for the first quarter of 2014, wherein both its top and bottom line steered past the Zacks Consensus Estimate.

Quarterly GAAP net loss came in at $42.9 million or 51 cents per share compared with a net income of $5.6 million or 7 cents per share in the year-ago quarter. In the reported quarter, DreamWorks incurred $57 million impairment charge for Mr. Peabody & Sherman feature film. Excluding these items, adjusted loss per share of 7 cents was narrower than the Zacks Consensus Estimate of a loss of 12 cents.

Total revenue in the first quarter of 2014 stood at $147.2 million, up 8.6% year over year and also above the Zacks Consensus Estimate of $140 million. Segment wise, Feature Film revenues were $110.1 million, Television revenues totaled $17.9 million, Consumer Products revenues were $12.1 million and the remaining $7.1 million was contributed by Other items.

Quarterly gross loss was approximately $13.4 million against a gross profit of $49.1 million in the prior-year quarter. Operating loss was $62 million versus a profit of 5.4 million. DreamWorks is trying to expand beyond the home video segment. The company has entered into an online streaming agreement with Netflix Inc. NFLX, created publishing and television operations and licensing its animation characters to theme-parks.

DreamWorks consumed $12.5 million cash from operations compared with cash generation of $41.7 million in the year-ago quarter. Free cash flow, at the end of first quarter of 2014, was a negative $18.2 million against a negative $33.7 million in the last-year quarter. At the end of first quarter of 2014, the company had $69.6 million of cash and cash equivalents and no outstanding debt against $95.5 million of cash and cash equivalents and no outstanding debt at the end of 2013.

Other Stocks to Consider

DreamWorks currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the movie industry which are worth considering include Lions Gate Entertainment Corp. LGF and News Corp. NWSA. Lions Gate sports a Zacks Rank #1 (Strong Buy) while News Corp. has a Zacks Rank #2 (Buy).