'The Hunger Games' is big business
The young-adult book series helped Scholastic achieve a great quarter, and shares of Lions Gate have risen on its movie plans.
Strong interest in the young-adult series is generating oodles of cash for the book publisher. As a result, the company beat expectations for its most recent quarter and raised its outlook for the full year.
Sales of the series of novels have spiked, the company said, as anticipation grows ahead of next week's release of the big-screen adaptation of the first book in the series.
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Shares of Scholastic initially soared 25% on the news to a nine-year high Thursday, then later pulled back to a gain of around 13% to $36.58.
The company said third-quarter revenue rose 22% to $467 million, helping reduce its loss from continuing operations to $3.2 million, or 9 cents a share, from 77 cents a year earlier. That was a welcome surprise to Wall Street, which had expected a loss of 70 cents a share on $393 million in revenue, Reuters reports.
The margin picture was also bright, narrowing to minus 0.1% from minus 7.8%.
Scholastic also upped its full-year outlook and said earnings from continuing operations should come in at between $2.60 and $2.90 a share on revenue of about $2 billion. That's quite a leap from its earlier forecast for earnings of between $1.75 to $2.10 on revenue of $1.9 billion.
The movie has also propelled shares of Lions Gate Entertainment (LGF) over the past year, and CNBC host Jim Cramer has estimated the franchise could be worth more than $400 million to the studio. The studio plans four films. For more on Lions Gate, see this recent post on how "The Hunger Games" is benefiting the company.
Scholastic hasn't had the best time of it recently, especially as interest has waned in its last blockbuster Harry Potter series. The company is moving to new technologies, including e-books, and that hasn't been the easiest transition.
Unfortunately for Scholastic, the "Hunger Games" run may not last. CEO Richard Robinson said many readers have already bought books, and author Suzanne Collins has no plans to write any more sequels.
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