Dreamworks Animation SKG Inc.DWA

Morningstar Rating

Stock Research and Analysis

by Larry Witt, CFA

DreamWorks Animation's Shrek franchise is one of the best in the industry. However, the box-office success of the firm's other animated films has been extremely unpredictable, resulting in volatile financial results and lackluster shareholder returns Read more

Bulls Say

DWA's ability to release five films every two years will enable it to build a large library of film-related assets more rapidly than its peers in the animated film business.

DWA's Shrek franchise is very valuable and gives the firm an asset to tap for years to come.

DWA's founders and managers are some of the savviest operators in Hollywood. Read more

Bears Say

DWA has released a number of films that posted disappointing box-office results, including "Wallace & Gromit," "The Road to El Dorado," "Spirit: Stallion of the Cimarron," and "Sinbad."

A disappointing movie could significantly hurt DWA's financial performance in a given year, as well as its future cash flows from home-entertainment sales, TV rights, and so on.

As broadband Internet connections increase in speed and popularity, digital piracy may weaken DVD sales for the movie industry; it has already led a significant decline of CD sales in the music industry.

Production of animated feature films by competing companies is increasing rapidly, which could put a strain on DWA's market share and the firm's ability to attract and retain creative talent. Read more

Strategy

DWA's strategy is to release two animated feature films per year (five every two years starting in 2010). When able, the firm also leverages popular titles by creating follow-ups such as "Shrek the Third" Read more

Management

Jeffrey Katzenberg is DreamWorks Animation's CEO and sits on its board. Before co-founding DreamWorks LLC with Steven Spielberg, David Geffen, and Paul Allen in 1994, Katzenberg ran Disney's motion picture division and was responsible for developing Read more

Profile

DreamWorks Animation creates animated films for a wide audience. Its computer-generated animated films are "Antz," "Shrek," "Shrek 2," "Shark Tale," "Madagascar," "Over Read more

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