The Walt Disney Company (NYSE:DIS)

CAPS Rating: 5 out of 5

The mouse has grown into a media giant. Disney’s empire includes movies (including Pixar), television (featuring ABC), and theme parks.

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Member Avatar jack21222 (98.22) Submitted: 2/10/2016 11:32:55 AM : Outperform Start Price: $87.64 DIS Score: +3.64

This seems like a great entry point for Disney... they beat earnings, gave good guidance, are a solid company, and yet the stock is pretty cheap at the moment.

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Member Avatar reimerpdx (65.31) Submitted: 2/10/2016 9:15:52 AM : Outperform Start Price: $87.50 DIS Score: +4.17

Star Wars, Marvel, and their ability to adapt ESPN to the new entertainment paradigm. Oh yeah... they have some parks or something too!

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Member Avatar mrgekko (48.40) Submitted: 2/9/2016 5:45:24 PM : Outperform Start Price: $88.00 DIS Score: +3.46

Short term buy

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Member Avatar Snydes (50.26) Submitted: 2/5/2016 10:26:15 AM : Outperform Start Price: $94.30 DIS Score: -1.97

Star Wars revenue, ESPN still makes money even though costs have gone up, cable providers who drop ESPN from package will likely lose more customers than gaining new ones from a lower priced package

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Member Avatar warrenout (99.66) Submitted: 2/4/2016 11:04:41 PM : Outperform Start Price: $95.32 DIS Score: -2.09



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Member Avatar SpartanMAC (< 20) Submitted: 2/2/2016 7:16:22 AM : Outperform Start Price: $94.00 DIS Score: -0.26

10%+ projected growth, shows free cash flow, one with lower PE of this group.

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Member Avatar TygerSpark (38.26) Submitted: 1/28/2016 5:28:15 PM : Outperform Start Price: $94.21 DIS Score: -1.46

Solid company with solid prospects with Shanghai Disney and Star Wars. The ESPN issue is overblown.

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Member Avatar SmoothHughes (23.47) Submitted: 1/26/2016 5:36:02 AM : Outperform Start Price: $95.49 DIS Score: -3.59

Unique capability to convert characters and franchises into dollars.

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Member Avatar ManualFix (48.06) Submitted: 1/20/2016 11:42:58 AM : Outperform Start Price: $49.66 DIS Score: +56.55

DIS earnings report scheduled for Tuesday, Feb. 9, strong chance for a positive reaction in the aftermath of StarWars opener and Xmas Merchandise sales

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Member Avatar CarsonCityFool (72.51) Submitted: 1/16/2016 3:06:46 PM : Outperform Start Price: $94.83 DIS Score: -3.71

Still not cheap, but one of the Top 5 brands in the world with a bright future (ESPN viewership drop excluded). Core copyright issues have been kicked down the road due to strong, successful lobbying efforts, and the new Chinese theme part should do well over the long term. Its acquisition of the Lucas Film library was a steal, and the company could very well recover its entire purchase price from the first new Star Wars film release and merchandising alone. After that, it's all gravy. In real life, I may very well be a buyer at $88.

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Member Avatar TheNatureBoy4 (< 20) Submitted: 1/15/2016 12:05:04 PM : Outperform Start Price: $112.91 DIS Score: -8.53

I don't buy into this talk that Disney is somehow overvalued and doesn't have much going for it other than the biggest movie and franchise of all time.

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Member Avatar jjcylk (47.91) Submitted: 1/14/2016 12:07:38 PM : Outperform Start Price: $98.48 DIS Score: -5.42

people will always spend on their kids. this is the best entertainment company.

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Member Avatar GregSinadinos (37.86) Submitted: 1/12/2016 6:13:59 PM : Outperform Start Price: $101.88 DIS Score: -6.51

With the StarWars franchise going strongly, another four movies over the next four years, and StarWars-themed expansions to MGM, I predict Disney's strength will only grow.

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Member Avatar usubanas (99.70) Submitted: 1/12/2016 2:34:15 PM : Outperform Start Price: $100.98 DIS Score: -6.75

The Stock Awakens

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Member Avatar BeFoolery (40.02) Submitted: 1/8/2016 6:22:13 PM : Outperform Start Price: $100.21 DIS Score: -5.74

leading media conglomerate, star wars franchise

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Member Avatar asdfk123 (87.03) Submitted: 1/5/2016 10:38:24 PM : Outperform Start Price: $99.38 DIS Score: -2.38

Disney is a content orientated company that relies heavily on its enduring brand recognition and strategic portfolio of franchise assets to drive content sales. Recent acquisitions of Marvel Entertainment and Lucasfilm were stellar in terms of improving its strategic portfolio of franchise content assets.

Disney has boasted a return on equity (ROE) north of 10% since 2011. ROE expanded from 12.86% in 2011 to 18.83% in 2015. Strong ROE is primarily fueled by an increase in net profitability. Net profit margins were 11.75% in 2011 and expanded to 15.98% by 2015. A ten year trend analysis demonstrates a compound annual growth rate of 4.33% in top line revenue and an 11.31% growth rate in net profit margin. The dramatic increase in net profit margins versus top line revenue is impressive, which supports the high ROE. Earnings per share has been increasing at a compound annual growth rate of 13.14% since 20015. This is in part fueled by stock buybacks.

Disney top competitors include firms such as CBS, FOX, and Viacom. Each firm has variation in profitability in part due to some competitors having discontinuing operations, a variety of other sources of income, and in some cases, different operating segments. Disney has a lower level of debt versus CBS and Viacom. This is reflected by a lower return on equity versus peers due to lower leverage levels for Disney. Given the nature of the diversified business units within Disney, it is difficult to perform an apples to apples comparison of firm profitability. A minor management concern with Disney is it is run by professional managers with minimal stake in the firm whereas management in Fox and Viacom include founders with skin in the game. While Robert Iger is an excellent CEO, the entrepreneurial spirit of founder management from Rupert Murdoch and Sumner Redstone arguably provides Fox and Viacom with a slight edge.

There are five major risks associated with an investment in Disney: economic downturn, entertainment tastes, consumption patterns, information security, and intellectual property rights. The risks with the highest impact on the register is the firms ability to keep up with constantly changing entertainment tastes, and adjust its business model to the changes in consumer consumption patterns. The primary source of these risks is consumer behavior. Disney has a good track record of meeting or exceeding customers entertainment tastes. Also, Disney is adjusting its distribution business model to accommodate consumption patterns by increasing content available across various digital platforms, such as Netflix and Amazon. Overall, when evaluating risk, firm risk is low.

When evaluating the competitive forces that shape industry strategy, it appears Disney has to compete with less intensity than rivals due to its strong brand and intellectual property rights. A strong brand and intellectual property rights increases barriers to entry and provides negotiating leverage in distribution.

A discounted cash flow analysis places Disney present value of future operations in the range of 157B- 167B. This assumption assumes top line growth of 6% over the next 10 years with an assumed long-term sustainable growth rate of 3% per year after 2025. A higher top line growth rate is assumed due to Disney’s strategic acquisitions of Marvel and Lucasfilm. The DCF model also assumes a gross and net profit margin that will begin to contract by 1% and 2% in 2020 and 2023 respectively due to higher input costs. With 1.65B shares outstanding, this gives the firm a share price of approximately $95-$101 per share.

Even though Disney stock is not cheap, the firm is fairly priced given its prospects for the future. Disney will be an exciting company to watch over the next 5-10 years!

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Member Avatar Kenji94 (51.90) Submitted: 1/2/2016 1:29:36 PM : Underperform Start Price: $103.12 DIS Score: +4.69

Overvalued, trading below 200 MA.

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Member Avatar txjoe79 (< 20) Submitted: 12/28/2015 9:31:18 PM : Outperform Start Price: $107.88 DIS Score: -5.88

Excellent financials and (obvious) well thought out plan.

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Member Avatar Claw70 (< 20) Submitted: 12/19/2015 3:41:50 PM : Outperform Start Price: $106.98 DIS Score: -7.56

Star Wars! Star Wars! Star Wars!

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Member Avatar TMFPencils (99.82) Submitted: 12/18/2015 1:44:35 PM : Outperform Start Price: $108.24 DIS Score: -8.65

The stock is down more than 3% today at the same time Star Wars is in the midst of smashing box office records, and this is only very the beginning of Disney building the Star Wars cinematic universe. Lots of things going for this business (in more than one segment), and I would be surprised if it isn't a market beater over the next 5+ years. Outperform.

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