DreamWorks Animation SKG Inc.
) highly anticipated release, "How to Train your Dragon 2" garnered
nearly $49 million in the U.S. in the opening weekend, falling well
short of the expectation of $65 million. Notably, the flick was
released last weekend across 4,253 domestic theatres.
DreamWorks's top-line growth is highly dependent on the company's
Feature Film segment which accounts for nearly 75% of the total
revenue. Hence, lower-than-expected revenue generation has resulted
in a 10.97% drop in company's share price during yesterday trade.
At the close of market, the company's stock price of $24.35 per
share was close to a 52-week low.
Released four years back, the first film of the trilogy had grossed
nearly $43 million in the opening weekend and generated an
astounding total of $495 million. Riding high on the success of the
first movie, DreamWorks remains highly optimistic about the second
flick. The success of this newly-released movie may make a
significant turnaround in the company's struggling feature film
Moreover, the analysts also raised their revenue expectations from
the second part of the trilogy based on the success of the first
part and the well-timed summer vacation release of the second.
On the bright side, "How to Train your Dragon 2" has collected
nearly $75 million worldwide in the opening weekend while $145
million was spent in making the movie. The production costs were
also 14% lower than the previous one. Moreover, the second part
received 93% positive reviews on Rotten Tomatoes and a strong 8.7
rating on IMDB. The movie also holds the second spot for the
highest grossing movie of the week, after "22 Jump Street" which
collected $60 million domestically.
Given the volatile nature of the movie business, DreamWorks is
striving to expand beyond the movie and home video business.
Recently, the company has launched its online TV channel -
DreamWorksTV - on
) YouTube. This multi-platform media service will combine
DreamWorks' original content library with the digital expertise of
AwesomenessTV, which was acquired by DreamWorks in May 2013.
The company has also entered into an online streaming agreement
), created publishing and television operations and licensing its
animation characters to theme-parks.
In the first quarter of 2014, the company incurred an operating
loss of $62 million against a profit of 5.4 million in the
prior-year quarter. Likewise, net loss came in at $42.9 million
compared with a net income of $5.6 million in the year-ago quarter.
However, animated movies have done well so far in 2014 as both Rio
2 and The Lego Movie featured among the top 10 highest grossing
movies of the year, generating over $450 million each. Thus, with
only one film "The Penguins of Madagascar" left to be released this
year, the company is likely to face troubled times.
DreamWorks currently has a Zacks Rank #3 (Hold).
A better-ranked stock in the movie industry worth considering is
) with a Zacks Rank #2 (Buy).
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