DreamWorks Animation (NYSE: DWA) is one of those fun stocks to own. Who wouldn't be happy pinning their portfolio's fortunes to Shrek and a bee character based on Jerry Seinfeld? Yep, this is a play on Hollywood animation; the question is, how did DreamWorks do for its fourth quarter and fiscal year?
DreamWorks Animation can be very competitive with Disney (NYSE: DIS) and its Pixar brand when it comes to computer cartoons. For that matter, it is competitive with others like Sony (NYSE: SNE), Time Warner (NYSE: TWX), News Corp. (NYSE: NWS), and Viacom (NYSE: VIA) -- they've all had computer cartoons in the marketplace. This latest earnings report proves it. Revenues for Q4 increased 42% to $290 million, and earnings came in at $0.98 per diluted share -- this compares to a loss of $0.20 per diluted share in the year-ago period. Revenues for the full year truly were animated -- they rose 94% to $767 million. Earnings for 2007 equaled $2.17 per diluted share. Talk about blowing away the previous year's stat -- 2006 earnings per stub came in at a mere $0.15.
Do I have to tell you what drove the results? Of course not, but I will anyway -- yes, the green guy called Shrek pulled his weight by turning Shrek the Third into a box-office phenomenon; it took in about $800 million at theaters around the globe. Other films from the company's library also contributed, even if you've forgotten them by now. The release listed Flushed Away, Over the Hedge, and Madagascar as delivering some revenues for the quarter. Judging by comments made by CEO Jeffrey Katzenberg, Jerry Seinfeld's A Bee Movie hasn't contributed much yet. This is normal, as the bulk of the money that is made from a movie oftentimes comes after marketing expenses and production costs are recouped and the project is released to the home video and pay-TV channels.
If you've been looking to get in on DreamWorks Animation's stock ahead of its next big movie release -- Kung Fu Panda, to be released this summer -- now might be the time to take a look, as the shares are trading up from their lows of the year.
Disclosure: Steven Mallas owns shares in Disney.
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