Is Too Much Value Priced in for The Hunger Games?

Media

Published: March 21, 2013 9:20 am

It is very frequent that companies get a boost from a novel series or from a movie series. It can be huge business. It can also be a sword that cuts two ways, and that is what we are seeing this Thursday at Scholastic Corp. (NASDAQ: SCHL).

The company reported that sales of The Hunger Games trilogy were significantly lower than expected in its most recent quarter. With another film coming up, investors have to wonder if there is a likely tie in here for Lions Gate Entertainment Corp. (NYSE: LGF), as it is the production house behind the movies.

The company is now looking for its earnings to be only $1.10 to $1.30 per share, and for sales to be down to a range of $1.75 billion to $1.8 billion. Its prior earnings target was $1.40 to $1.60 per share on sales of $1.8 billion to $1.9 billion. While this doesn’t sound too bad this time around, earnings projections are now down by almost 50% from as recently as September.

It was going to be hard to compare to the strength from a year ago, but overall sales were down by 19% and Scholastic has now lowered its annual targets for the second time in the last four months or so. Scholastic investors have seen this before, with big swings higher from Harry Potter leading to big booms, only to be followed by big busts. One other issue affecting sales is that school districts have delayed purchases as they have turned more toward training and digital investments.

Scholastic’s share price is down almost 14% at $26.75 in early trading on Thursday, versus a 52-week trading range of $25.03 to $38.49.

We are not seeing any trading indications that would signal a major change in shares of Lions Gate Entertainment, but at $22.75 we would note that shares are up about 200% from when Carl Icahn got involved and then bailed out. The huge boost has been from The Hunger Games. With another film coming up, it is hard to not wonder if investors will look at the 52-week range of $11.26 to $23.45 and decide to take at least some profits here.

Credit Card Companies Are Doing Something Nuts

Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.

It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.

We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.

Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.