Disney Impresses Yet Again – Why This Is A Stock That Should Be In Your Portfolio

Disney Impresses Yet Again – This Is A Stock That Should Be In Your Portfolio

​Disney (DIS) is a perennial buy for long-term investors, it seems. The company, which could have been described as a cash cow prior to acquiring Pixar, has become a little more of a growth company as it has continued to build on its studio with the acquisitions of Marvel and Lucasfilm.

On Tuesday, the company proved itself again by beating analyst expectations on both revenue and earnings for Q2 2015. Revenue came in at $12.46 billion, a 7% growth from this time last year and beating the consensus by $210 million. Earnings per share were reported at $1.23, beating the estimate by $0.13.

Disney has a strong track record of beating analyst expectations and with its growing studio segment, it likely has enough resources from which to draw to continue that track record for years to come.

About that studio segment

The International Business Times mentioned that Disney’s studio entertainment segment actually contracted by 6% from a year ago, but this shouldn’t be cause for alarm, given that the blockbuster hit “Frozen” was at its peak a year ago. In fact, Disney’s “Cinderella” was a surprising hit, raking in $494.6 million—although it wasn’t quite as strong as last year’s “Maleficent”, which brought in $758.4 million worldwide.

But with just a $95 million budget on “Cinderella” and a $180 million budget for Maleficent, both films were successes, enough to spawn a slew of new live-action films to be slated for the coming years: including “The Jungle Book,” “Beauty and the Beast,” “Dumbo,” “Mulan,” “Winnie the Pooh” and “Pinnochio.”

Let’s also not forget where the real money comes from. The new Avengers movie has already grossed $630.3 million after less than a week, and  movies in that universe are slated through 2028. Lucasfilm has at least six Star Wars films planned, which is just the beginning of building out that universe modeled after the Marvel universe. On top of that Pixar continues to pump out successes. Among its upcoming titles is a new installment in the Toy Story franchise.

What could go wrong?

While Disney continues to see growth in its parks, television and consumer products segments, its success is built on the foundation of its studio segment. The problem that Disney might run into is high expectations. The company has pumped out blockbuster after blockbuster with its Marvel and Pixar studios that it’s hard to think it may offer up a dud.

But we know it’s possible. We saw it happen with royal flops “John Carter” and “The Lone Ranger.” But if it were to happen, Disney’s studio segment is diversified enough to withstand such a blow over the long term. And if the company somehow does miss analyst expectations, the dip that follows will likely be just another opportunity for long-term investors to add to their stake.

If anything can go wrong with Disney, it’s likely only to be a temporary blip. The company has a solid enough foundation and is well diversified across the board as well as within its segments. Disney fans can remain that way, knowing that the company’s business model is strong enough to last for years to come.