Tag: stock analysis

Introduction

The Walt Disney Company (NYSE:DIS) can’t seem to get out of its own way when it comes to breaking out of this chronic stock slump after moving from the $120s in late 2015 to being stuck in the $90 range all throughout 2016. This perpetual slump is almost entirely attributable to the decrease in ESPN subscribers and thus revenue and profit from their Media Networks segment. Excluding ESPN, Disney has been executing well and reporting record numbers throughout its other business segments. Disney has a deep and diversified enough entertainment portfolio to make a compelling case that these ESPN fears are overblown. Disney’s portfolio consists of Marvel Entertainment, Lucasfilm, Pixar, ESPN, ABC, a 32% shareholder in Hulu and of course the core Disney franchise (Disney Studios, Disney consumer products, Parks and Resorts and Disney Cruise Line). The revenue stream from these assets is as diverse as the assets themselves. The ESPN franchise within the Media Networks segment generates revenue/operating income that is disproportionate to the amount of the company’s overall revenue and operating profit. Thus, one can see why investors were spooked after two consecutive significant declines in ESPN numbers in Q4 2015 and Q1 2016. The decreases in revenue within this segment have been arrested and on the rebound due to measures put in place at Disney. As this revenue stream slowly recovers and investors can rest assure, Disney will retrace the $120 level. In the meantime all other segments are performing well and coupled with dividends, share buybacks, a P/E ratio of ~17.0 and currently sitting at a 52-week low (excluding the flash crash in February), I’d be a buyer of the stock at these levels. Continue reading "Disney Can't Seem To Breakout" →

I recently wrote a piece highlighting Disney as an inexpensive growth opportunity for long-term investors. My positive sentiment was rooted in many lucrative franchises such as Star Wars, Pixar, Marvel, ESPN and the legacy Disney brand turning out original content such as Frozen and Zootopia. Disney offers a deep and well-diversified product portfolio that is set to provide growth and safety well into the future. This portfolio gives rise to a basket of entertainment income streams via movies, licensing deals, theme parks, TV programing, resorts and distribution rights. Disney stock has been under pressure as of late due to increasingly worrisome revenue declines from the ESPN franchise. I felt this decline in the stock is unwarranted, and analysts underestimate the ability of Disney to evolve to the consumer and monetize ESPN via other means. My views were recently echoed by analysts at Pivotal Research which upgraded the stock from a hold to a buy and raised its target price from $104 to $122. JPMorgan Chase also reiterated its buy rating and a $118 target price. Disney has witnessed fantastic growth over the last decade and considering future catalysts in the pipeline; Disney appears undervalued. Disney currently sits at a P/E of ~18 along with a PEG of ~1.5 and has seen its stock fall from $122 to a current price of ~$100 or alternatively a ~20% decline. This presents a great buying opportunity in an inexpensive, high-quality growth stock.

Are Hasbro Results A Harbinger for Upcoming Disney Earnings?

Disney and Hasbro have established a mutually beneficial partnership as Hasbro’s recent quarterly sales increased by 16%. This double-digit increase in sales was largely attributable to the sales of Disney’s Star Wars and Princess franchises. Overall, Hasbro’s revenue grew to $831.2 million from $713.5 million during a time that is typically slower for toy makers. Hasbro’s strong numbers benefited from the late 2015 release of the new Star Wars film. CEO Brian Goldner stated “Retail and consumer demand for Star Wars remained very high” and that Hasbro’s line of Disney Princess characters was “very positive.” The Disney and Hasbro relationship is being leveraged for future movies such as the upcoming Captain America Civil War film as well. Continue reading "Are Hasbro Results A Harbinger For Disney Earnings?" →

Disney offers an array of world renowned franchises (Star Wars, Pixar, Marvel, ESPN and the Disney offerings) that offer a deep and well-diversified product portfolio. This portfolio gives rise to a basket of entertainment income streams via movies, licensing deals, theme parks, TV programing, resorts and distribution rights. Disney stock has been under pressure as of late due to increasingly worrisome revenue declines from the ESPN franchise. I feel this decline in the stock is unwarranted and analysts underestimate the ability of Disney to evolve to the consumer and monetize ESPN via other means. The generational penetration of the Star Wars, Marvel, Pixar and the legacy Disney franchises are being underestimated and undervalued. Disney has witnessed fantastic growth over the last decade and considering future catalysts in the pipeline; Disney appears undervalued. Disney currently sits at a P/E of 18 along with a PEG of 1.5 and has seen its stock fall from $122 to a current price of $96 or alternatively a 21% decline. This presents a great buying opportunity in an inexpensive, high-quality growth stock.

Future Growth and Pipeline

Disney has a rich pipeline with Star Wars themed parks, Star Wars movies, the opening of Disney Shanghai, Marvel movies, Pixar movies and future Disney movies such as Finding Dory to highlight a few. The deep movie portfolio and distribution schedule is highlighted below (Figure 1). Continue reading "Disney - A Very Attractive Inexpensive Growth Stock" →