Can Peppa Pig-producer Entertainment One keep investors interested with next Tuesday’s half year results?
After trading between £2.20 and £2.50 for much of the first 8 months of the year, the media company really found its footing at the start of September. Since then it’s had a rocket strapped to its back, surging to a 16 month high of £3.01 on 9th November. Entertainment One Ltd (LON:ETO) now sits at a current trading price of £2.94.
Back in May the company posted an impressive 35% surge in full year revenue to £1.1 billion, primarily thanks to the Peppa Pig-fuelled family division. However, pre-tax profit plunged 22% to £37.2 million in large part due to a £47 million restructuring charge related to the film business, the company’s biggest generator of revenue.
Entertainment One’s most recent update came at the end of September, and once again Peppa Pig was the star. The children’s show is increasingly gaining traction in China, where it has more than 34 billion views on the country’s social media platforms since launching 2 years previous, leaving revenue for the brand ahead of expectations thanks to expanded ‘licensing and merchandising activities’. New properties like kid’s show PJ Marks and Kiefer Sutherland-hit Designated Survivor, meanwhile, drove the value of the company’s content library 13% higher to $1.7 billion.
However, it wasn’t all good news. The film division once again put a dampener on proceedings, with box office revenues falling from $151 million to $82 million year-on-year due to a weaker slate of releases across the first half. It does have a few potential hits to look forward to in H2, namely A Bad Moms Christmas, Paddington 2 and Steven Spielberg’s Tom Hanks and Meryl Streep-starring The Post.
October was then a very busy month for the company. It signed a deal with Wattpad to dig through the fan fiction site’s 400 million user-generated stories for potential development opportunities, while it also unified its TV, film and digital production departments (following on from the merging of their respective sales divisions earlier in the year).
In terms of Tuesday’s half year results, investors will be looking for pre-tax profit to bounce back after the restructuring charges-hampered figure posted back in May.
Entertainment One Ltd has a consensus rating of ‘Buy’ alongside an average target price of £2.64.
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