Marvel Stock Slumps While Revenues Rise

by Jeff

Consider it evidence of the madness that infects the financial world: even as Marvel is having one of its best years, with Iron Man doing extremely well at the box office, Wall Street decides it’s just not doing well enough.

New York-based Marvel, whose spring movie hit “Iron Man” featured Robert Downey Jr. as the scientist-genius-egomaniac Stark, today reported a 60% jump in second-quarter profit, thanks mainly to a surge in revenue from licensing of merchandise tied to “Iron Man” and others in Marvel’s large cast of characters.

But Wall Street focused on the company’s revised revenue and profit forecasts for 2008. Although Marvel boosted its revenue estimate for this year to a range of $450 million to $480 million, an increase of 20% from its May forecast, analysts’ consensus was for $516 million, according to Bloomberg data.

Given the big rally in Marvel’s stock in spring on the box-office success of “Iron Man,” maybe investors were just looking for an excuse to bash the shares. In any case, they did: The stock slumped $4.07, or 11.5%, to $31.19, though the price still is up almost 17% year to date.

  c2b-foot Marvel Stock Slumps While Revenues Rise

The Motley Fool brings us to our senses:

D1A2E8AA-77CA-40C0-8EBE-76BE51C3614C Marvel Stock Slumps While Revenues Riseclipped from www.fool.com

With great numbers come great returns … eventually

Marvel’s second-quarter numbers were outstanding. Overall licensing revenue improved by 44.7%, and domestic consumer products licensing nearly doubled. Earnings, meanwhile, blew the Street away — $0.59 per share versus the $0.45 analysts had been expecting.

The only number from Marvel’s report that’s worth worrying about — and it may not even be worth that — is revenue from publishing, down roughly $1 million year over year. But that appears to be due to outstanding numbers in last year’s second quarter, when signature hero Captain America fell victim to Marvel’s killer writers.

Don’t let a small mistake become huge

So, yeah, I blew it in overestimating Marvel’s 2008 profit. So be it. I refuse to let a small mistake — not reading the transcripts carefully enough — become a huge error. That’s what I’d be doing were I to sell my Marvel stake at today’s severely discounted price.

  c2b-foot Marvel Stock Slumps While Revenues Rise

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