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Disney — Your Source for Digital Entertainment

Stock (Symbol)

Walt Disney (DIS)

Stock Price

$112

Sector
Retail & Travel
Data is as of
March 17, 2017
Expected to Report
May 8 – 12
Company Description
The Walt Disney Company’s business segments include Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive. The Media Networks segment includes cable and broadcast television networks, television stations, and radio networks and stations. The Parks and Resorts segment owns and operates the Disney Resorts and Disney Cruise Line. The Studio Entertainment segment produces live-action and animated motion pictures through Walt Disney, Pixar, Marvel, Touchstone Pictures & Lucasfilm. The Consumer Products segment engages with licensees to design a range of products. Source: Thomson Financial
Sharek’s Take
David SharekDisney (DIS) is kinda like Netflix. Disney sees the worldwide opportunity in having its products on a monthly subscription service — where viewers pay the company directly. And boy, what great content DIS has. Games and shows on ESPN, movies from Disney, shows for kids on the Disney Channel. CEO Bob Iger — one of the smartest leaders in the world — is moving into digital and the outlook is bright. Walt Disney is the world’s largest media company, with four main divisions:

  • Media Networks (43% of 2016 sales) — ABC, ESPN, Disney Channel, ESPN Radio.
  • Parks & Resorts (31%) — Disneyland, Walt Disney World, Disney Cruise Line. Shanghai Disney opened in 2016.
  • Studio Entertainment (17%) — Disney Studios, Pixar, Marvel, Touchstone Pictures, Lucasfilm.
  • Consumer Products & Interactive Media (10%) — toys, apps, apparel, books, games.

Disney Owns the Content. Iger acquired Pixar, Marvel and Star Wars and all produce blockbusters THEN deliver merchandise sales AND content for digital delivery via either cable or subscription. ESPN has been losing cable customers, but that might turn around in 2018. And honestly, sports fans want games, and ESPN has ponied to secure the top leagues and games. DIS is one of the safest stocks in the world. And it’s grown profits 10% per year the last decade — that’s amazing. It even yields 2%. The only issue is the stock’s not on sale. My 2017 Fair Value is $101 a share, with 2018’s $114.

One Year Chart
The company is currently going through a period of slower growth, with profit growth expected to accelerate to the double-digits by the qtr ending Sept. 30th. Last qtr sales at Disney fell 3% and profit dropped 5% , but beat the -8% estimate. Last year DIS had lots of merchandise sales from from Star Wars and Frozen, thus comparisons are tough right now. What concerns me more than the negative profit growth is DIS’s P/E of 19, which is high historically. But on the bright side, 2017 profit estimates stopped declining (from $6.19 to $6.06, $5.92, and now $5.94 the last 4 qtrs). Qtrly profit Estimates are 3%, 4%, 18% and 19%.
Fair Value
During the past decade this stock has had  median P/E between 12 and 21. Now at 19, I feel the stock may have gotten ahead of itself. Disney’s fiscal year end is September 30th, and after DIS reports its June 30th results I’ll look ahead to 2018’s Fair Value. This stock’s not really overvalued by that much.
Bottom Line
Walt Disney is a high quality Blue Chip stock that’s perfect for long-term buy-and-hold investors. I’m so impressed the company has grown profits at a double-digit rate the last decade. And analysts estimate the company will grow 10% in the future. I love the direction the company is headed in — digital content. The only issue I have is the stock’s a bit high right now, so try to get it on a dip. DIS ranks 28th of 30 stocks in the Conservative Portfolio Power Rankings.
Power Rankings
Growth Stock Portfolio

N/A

Aggressive Growth Portfolio

N/A

Conservative Stock Portfolio

28 of 30

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