Stock Performance Review: Dreamworks Animation (DWA)

Dreamworks is a company that many people were interested in investing in when it first started producing films. Its owners, Speilburg, Katzenburg, and Geffen, have made the company's productions memorable and instant classics, however, for the most part this company has remained private. Then in 2004 the animation division of Dreamworks went public. If you are interested in investing in Dreamworks Studios, then this may be your opportunity, however, you should know a little bit about the initial performance of this stock before you invest.

What Dreamworks Animation (DWA) Does

Dreamworks Animation is the animation division of the Dreamworks Studio. Some of the films that have been produced by this company include: Shrek, Shrek 2, Shrek 3-D, Road to El Dorado, and the Prince of Egypt. This company has seen a lot of critical and public acclaim, and their films have proven to be very successful, even when faced off against the veteran of this industry, the Walt Disney Company.

52 Week Performance of DWA

During the 52 week period ending on 08/22/06 DWA stock has fluctuated between 20.05 and 28.80 per share. On 08/22/06 the stock was valued between 21.32 and 21.64. This shows that the stock has shown some improvement, but it has failed to maintain its high value of 28.80. Because this is a newer stock, it has not produced a dividend and yield return yet. However, while this stock has experienced some stability issues, it is projected that the stock should increase in value over the next year and it should reach a value of about 26.07 within the year.

Historical Performance of DWA

As mentioned above DWA is a very young stock. It was first offered back in 2004 and sold for just under $40 per share. During its first few months the stock escalated above $40 per share, but as the months past the value of the stock dropped in value. This really is not a sign of trouble, as the stock was finding its true market value. It was perhaps overvalued when it was first offered. Since the stock bottomed out at $20 the stock has remained close to this value. While this may be a sign of problems for an older stock, because this is still a young stock this may be an opportunity to buy DWA stock at a good price before the stock matures and gains in value.

Strengths of DWA

DWA has a few things that lead to the future possibilities of this stock. First the company has a good track record of producing great franchise properties that have performed well, even when ticket sales have waned. Secondly the production staff contains the top producers in the entertainment industry. Finally, this company has shown excellent revenue growth this last quarter and they have a good market position to advance from.

Weaknesses of DWA

The problems that DWA face as a stock are mostly due to its recent arrival in the public trading arena. As a new stock investors aren't sure about its potential yet, because there isn't a lot of history to back up their investments. The second problem that DWA faces is that there has been a recent increase in competition in the animation field. DWA has to not only compete against Disney films, but they also have to compete against Pixar films, Blue Sky Studios Films, and other private animation studio films.

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