DreamWorks Animation SKG Inc.'s shares jumped Thursday after the animation studio reported a 74 percent increase in its second-quarter profit, partly on the prehistoric shoulders of "The Croods."
THE SPARK: DreamWorks said Wednesday that its quarter came in better than expected due to the success of a number of movies, most notably "The Croods." The movie about a family of cavepeople made $584 million at the box office worldwide.
The company earned 26 cents per share for the period on revenue of $213.4 million. Analysts polled by FactSet had anticipated earnings of 20 cents per share on revenue of $189.7 million.
THE BIG PICTURE: Dreamworks also benefited from films such as "Rise of the Guardians," ''Madagascar 3: Europe's Most Wanted" and "Puss in Boots" during its second quarter. Third-quarter results are expected to be driven by pay television revenue from "Rise of the Guardians" and international free television for "Kung Fu Panda 2."
Dreamworks also named a number of new leaders, such as former Nickelodeon leader Marjorie Cohn as its first head of television, as it seeks to expand its television presence. The company is trying to expand its revenue beyond its films with an increased emphasis on television.
THE ANALYSIS: Cowen and Co. analyst Doug Creutz said that while the company's film economics have improved, he remains concerned that its domestic film performance is on a downward trajectory.
"We have said this before, and we are saying it again: we ought to be seeing (Dreamworks') movies squashing the competition, not vice versa," the analyst wrote in a research note.
Creutz lowered his 2013 earnings estimates by a penny to 63 cents per share, well below market expectations of 76 cents per share. The analyst said that he expects higher expenses will more than offset additional revenue from "Turbo" and "Rise of the Guardians." He kept a "Market Perform" rating on its shares.
SHARE ACTION: Shares jumped $2.21, nearly 9 percent, to $26.97 by late afternoon Thursday. The company's shares hit as high as $27 earlier in the day, levels it hasn't hit since 2011.