Lions Gate Entertainment's (NYSE: LGF) stock rose nearly 5% in after-hours trading on Friday after the movie studio issued its Q1 report. In fact, the stock hit $11 per share. What drove this reaction? Well, Wall Street was figuring on a loss for the company, somewhere around $0.05 per share, according to the AP. However, management fooled everyone by delivering a $0.06 per-share profit. Last year's Q1 saw a net loss of $0.45 per share. The top line was also awesome, rising 50% to $298.5 million. This also went beyond expectations.

These numbers are impressive to a certain extent. Management reported a nice backlog of revenues derived from movie projects that should be recognized in later quarters. There was a lower amount of expensed-costs related to distribution, an element that helped things out a great deal.

Cash flow, however, was an entirely different matter altogether. Lions Gate reported a much wider use of the green stuff this quarter. In fact, the metric more than doubled to nearly $150 million. Changes in working capital affected the cash flow, including increased investments in content productions and a larger booking of participations and residuals. Negative free cash flow also expanded, coming in at roughly $110 million this quarter versus $82 million one year ago.

Continue reading Lions Gate claws past expectations, but that doesn't mean its stock is a buy

Lions Gate claws past expectations, but that doesn't mean its stock is a buy originally appeared on BloggingStocks on Sun, 10 Aug 2008 11:10:00 EST. Please see our terms for use of feeds.