4 Top Entertainment Stocks To Watch For 2021

NYSE: DIS | Walt Disney Company (The)  News, Ratings, and Charts

2020 has turned out to be a historical year for many reasons. While the pandemic delivered a brutal blow to theatres and all in-person forms of entertainment, it has been very kind to video-streaming services thanks to the ‘stay-at-home’ trend. A study from Grabyo showed that Americans are collectively spending an average of $1 billion a month more on video streaming since January.

Entertainment companies that are digitally focused have delivered huge returns to investors this year. Also, keeping with changes in consumer behavior in mind, these companies are preparing for the post-pandemic world through constant innovations. The global streaming market size is projected to grow at a CAGR of 12% to reach $842.93 billion by 2027, according to Fortune Business Insights.

Going into 2021, it is wise to consider established entertainment companies such as Walt Disney Company (DIS - Get Rating), Netflix, Inc. (NFLX - Get Rating), Comcast Corporation (CMCSA - Get Rating), and Charter Communications, Inc. (CHTR - Get Rating) that have displayed business resiliency amid these trying times and are getting ready to maintain their momentum in a post-pandemic economy.

Walt Disney Company (DIS - Get Rating)

DIS operates as an entertainment company worldwide. The Company operates through four business segments — Media Networks, Parks Experiences and Products, Studio Entertainment, and Direct-To-Consumer and International. DIS’ Parks, Experiences and Products segment was adversely affected by the ongoing pandemic with many of the parks and resorts being closed or operating at a reduced capacity. However, the company made huge progress in its direct-to-consumer business.

For the quarter that ended September 2020, DIS's total revenues increased 24.9% sequentially to $14.7 billion. Revenues from the media network segment increased 10.8% year-over-year to $7.2 billion, while revenues from direct-to-consumer & international segment increased 40.8% year-over-year to $4.9 billion. Disney+ launched in November 2019 and reported more than 73 million paid subscribers, which surpassed DIS’s expectations. The total number of paid subscribers for Hulu increased 28.4% year-over-year to 36.6 million.

Analysts expect DIS’ revenue to increase 6.1% in 2021, and 22.5% in 2022. The company’s EPS is expected to increase 190.1% in 2022 and at a rate of 41.6% per annum over the next five years. DIS’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.

The company held its Investor Day 2020 on December 10th and announced that it will launch Star, its international general entertainment content brand. It is expected to be launched in Europe and several other international markets on February 23rd, 2021 as a fully integrated part of Disney+. On October 26th, DIS announced that Disneyland Paris has embarked on one of the largest solar canopy energy projects in Europe, which is expected to be completed by 2023. The stock has gained nearly 98% since hitting its 52-week low in mid-March. It is currently trading 2.1% below its 52-week high of $179.45.

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