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Investors are selling off Lions Gate Entertainment (NYSE:LGF.A), lack of profits no doubt contribute to shareholders five-year loss

The main aim of stock picking is to find the market-beating stocks. But even the best stock picker will only win with some selections. So we wouldn't blame long term Lions Gate Entertainment Corp. (NYSE:LGF.A) shareholders for doubting their decision to hold, with the stock down 40% over a half decade. The falls have accelerated recently, with the share price down 16% in the last three months. Of course, this share price action may well have been influenced by the 8.7% decline in the broader market, throughout the period.

With the stock having lost 4.1% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Lions Gate Entertainment

Because Lions Gate Entertainment made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

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Over half a decade Lions Gate Entertainment reduced its trailing twelve month revenue by 1.0% for each year. That's not what investors generally want to see. The share price decline at a rate of 7% per year is disappointing. But it doesn't surprise given the falling revenue. It might be worth watching for signs of a turnaround - buyers are probably expecting one.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

Lions Gate Entertainment is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

A Different Perspective

We regret to report that Lions Gate Entertainment shareholders are down 1.1% for the year. Unfortunately, that's worse than the broader market decline of 0.5%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, longer term shareholders are suffering worse, given the loss of 7% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Lions Gate Entertainment better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Lions Gate Entertainment you should be aware of.

We will like Lions Gate Entertainment better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.