Marvel Beats, Disappoints

By Travis Johnson, Stock Gumshoe, August 5, 2008

The oft-noted “Best Stock Ever” from the Motley Fool, which has been teased by them more times I can count, is Marvel, the comic book and movie juggernaut. David Gardner at the Fool did a fabulous job of picking this one up out of the swoon it was in down in the single digits several years ago, and I like the company too (I owned shares until recently, and still some calls on the stock, and will probably buy again before too long).

They released their earnings today, which included a significant beat on earnings per share (.59 versus .45), and they boosted their guidance for the year — they say they’ll earn as much as $1.75 a share, versus their earlier guidance of $1.55.

Unfortunately for them, analysts had already raised their estimates for this year to $1.96. Thus the 10% haircut the shares received today, though they’re still in the $30-35 range where they’ve lived since Iron Man started wowing critics earlier this year.

As I note, I still have some exposure to Marvel and I like the company — their prospects seem more solid now that they’ve had two self-produced movies come out and managed to get one blockbuster sequel generator (Iron Man) and one probable profit-maker (Hulk) out of them. The cash should flow nicely throughout the year thanks to DVD and other sales from those two.

But next year things get dicey, so I expect we’ll probably see plenty of opportunity to buy Marvel in the $20s again. Thanks to the writers strike, Marvel won’t be producing any of their own films for 2009 … though there will be the Wolverine movie, which will probably be a big hit and generate some royalties for them. That comes out next May. For more self-produced films from the house of Spiderman, we’re going to have to wait for Iron Man II and Thor in 2010, and Captain America and The Avengers in 2011, with both years seeing the same double-barreled late Spring/early Summer popcorn slotting that they used for Iron Man and Hulk this year.

Like most stocks, Marvel tends to trade on the events of the coming six months or so — though it will probably have more investors interested after Iron Man was such a big hit. I’d guess that means that the relatively news-free 2009 for these guys means that ...

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