Walt Disney Company (NYSE: DIS), in conjunction with its subsidiaries, is a diversified entertainment company that operates in five segments: interactive, consumer products, studio entertainment, parks and resorts, and media networks.
Disney brought in $52 billion in annual revenue last year, resulting in an annual profit of $8.4 billion. The company's net profit margin is 16.12%, and experts indicate an EPS forecast this quarter of $1.61 per share, which will be reported on August 2.
Shining Among Strong Peer Group
Disney faces competition across various markets, with its biggest competitors including Comcast (Nasdaq: CMCSA), CBS (NYSE: CBS), 21st Century Fox (Nasdaq: FOX), Time Warner (NYSE: TWC), and Viacom (Nasdaq: VIA). Although the market value of DIS is significantly higher than TWC and FOX, Comcast is not far behind Disney. In fact, Comcast's stock is currently trading at or near its 52-week-high, indicating a possibility that there is room for future stock price increases.
(Yahoo! Finance)
Stock Performance YTD Reveals A Buying Opportunity
As of June 2016, Disney is trading below where it was one year ago as its stock price has dropped 12.25% since then. The company's 52-week-high topped out at $122.08 on August 4, 2015, and the company saw a 52-week-low at $86.25 on February 10, 2016. Experts also indicate that the trading volume of DIS was 8,268,601 -- significantly higher than the company's average daily trading volume of 5,202,797.
(Yahoo! Finance)
Risks Noted: Roller Coaster Ride for Disney's Management
CEO succession plans is currently the hot topic at Disney. Chief Operating Officer Tom Staggs was the presumed heir to CEO Robert Iger until he unexpectedly announced in April, 2016 his plans to step down. Mr. Iger, 65, plans to retire in June 2018. Disney stocks fell 1.6% after news on Tom Staggs departure and so finding a capable successor for CEO is on everyone's mind.
On top of this, earlier this month, experts expressed concern regarding Disney's stock following an alligator attack on a two-year-old Nebraska boy at one of the company's resorts. Critics of the company claim that Disney was negligent in that the company failed to implement appropriate warning signs around the beaches indicating the possible presence of gators.
Overall Excellent Year for Disney Studio
DIS stock has regained its momentum, briefly increasing above the $100 mark following a strong release weekend for Finding Dory. The movie has grossed $136 million so far, setting a record for an animated film. The movie has almost doubled the opening take of Finding Nemo, its predecessor, which raked in $70 million of sales during its launch in 2003.
It has been a strong year for Disney's studio business. The House of Mouse made history by surpassing $1 billion of sales due to a diverse group of hits from its Disney Animation (Zootopia), Disney Pictures (The Jungle Book) and Marvel (Captain America: Civil War) studios. With the release of Finding Dory, investors can safely include Pixar in the company's "winning" column.
Final Verdict: Chance To Buy
Disney has a great chance of finishing this year as the top movie studio in the country, a feat that has not happened in more than 10 years. So far, profits from Disney's studio are up 60% for the last six months and are helping to offset the company's slow growth from its media networks segment. In addition revenue from theme parks has also increased after the successful opening of Shanghai Disneyland.
Despite concerns over succession planning, Disney's diversified business line and strong performance both in media studies and theme parks has well positioned it for a strong year.
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