Absent current blockbuster film projects, Marvel Entertainment's (NYSE: MVL) earnings were still respectable for the second quarter. Without new hit movies such as Iron Man and the Incredible Hulk, which were released last year, the comic book and film company still managed to bring in decent revenue, though both revenue and profits were down. More interesting to investors is what is on the horizon for the company known for its super-heroes.

IN PICTURES: How To Make Your First $1 Million

A Down Quarter
Marvel's revenues were off for this quarter, down to $116.3 million, compared to $156.9 million for last year's same second quarter, with earnings of $29 million, or 37 cents a share, compred to $46.7 million or 59 cents in last year's quarter. Marvel's guidance for the year is for $1.25 to $1.35. When you consider that Marvel achieved these earnings on the basis of simply running its day-to-day publishing business with its comics and that the bulk of the earnings from its blockbuster films have already been booked, these are still good numbers during a severe recession.

Other Media Players
Marvel's 38% dip in profits isn't that unusual for entertainment companies in this economic climate. Time Warner (NYSE: TWX), with its sprawling properties, had declining revenues from its film and publishing segments, and after spinning off Time Warner Cable (NYSE: TWC) is only now getting around to spinning off AOL. It can be argued that Time Warner has never yet found the formula to fit its assets together.

Entertainment behemoth Disney (NYSE: DIS) continues to feel its way through the recession, as its mix of films, amusement parks and television networks all continue to produce uneven revenues for now. The long-term strength of Disney's properties or operations, though, is still hard to dispute.

Smaller entertainment companies, such as toymaker Hasbro (NYSE: HAS), are making inroads into the film business with their successful Transformer and GI Joe properties. Now Hasbro is set to make its entry into television with its own studio productions in conjunction with Discovery Communications. Though these start-up costs have perhaps dampened Hasbro's profits in the near-term, this could be a successful venture which ties in well with its current properties. This is a contrast with the non-synergistic elements of much of Time Warner's far flung segments, for example.

Marvel Loads Up
Marvel is gearing up for Iron Man 2, the sequel to its successful Iron Man movie, and continues to produce robust sales in its comic book publishing operations, the cornerstone of its business. It has now fully ventured into film-making, as it will be making its films instead of joining with other studios. Marvel's film studio operation can itself become a formidable player, as compared to such small, quirky entertainment studios like Lionsgate Films (NYSE: LGF), which are favored by investor Carl Ichan, but can be outstripped by Marvel's movies which can generate huge money. Marvel's proceeds from the first Iron Man film not only went into the company coffers, but were enough to help pay down debt. That's a bonus in recessionary times.

Make Yours Marvel?
Years ago, Marvel's creator, the irrepressible Stan Lee, coined the phrase "make mine Marvel," in reference to the iconic comics such as Spider-Man and the Fantastic Four he was so integral in creating. Can investors say the same now? The stock has been run up to near its 52-week high, despite the recession, the lousy stock market and Marvel's somewhat tepid recent earnings. It seems that long-term value investors, if not short-term traders, know the value of this company and its vast potential, both near and far term. Watch for pull backs in this stock in order to grab one of the most focused, innovative and successful entertainment companies there are. (For more, see The Value Investor's Handbook.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    Retirees: 7 Lessons from 2008 for the Next Crisis

    When the last big market crisis hit, many retirees ran to the sidelines. Next time, there are better ways to manage your portfolio.
  2. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  3. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  4. Fundamental Analysis

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
  5. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  6. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  7. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  8. Fundamental Analysis

    Gloom and Doom for Global Markets in 2016?

    Learn about the volatility in global markets during the beginning of 2016. See why famous investors are saying some economies could see recessions.
  9. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  10. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
RELATED FAQS
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do interest rates increase during a recession?

    Interest rates rarely increase during a recession. Actually, the opposite tends to happen; as the economy contracts, interest ... Read Full Answer >>
  3. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center