This article is a quick analysis that delves into the overall fundamental outlook and the big picture stock price movement, but not in an in-depth manner. Please do your own research and due diligence before investing in this or any other stock. Additionally, we may go long or short DIS at any time (or any stock or ETF discussed) in our real-time Options Trading Recommendation services. Disclosure: no current personal holding in this stock, but one may be added at any time.
By ‘long-term’, in this case we are referring to a 1 to 4 year time horizon, beyond that it gets rather difficult to forecast due to uncertainty and how rapidly things can change in the modern connected world.
The Walt Disney Company (DIS) –
An incredible portfolio of global intellectual and other properties makes this a pop culture behemoth unlikely to slow down. Continued growth potential, reasonable valuation, good stock performance over long and short term, and always looking to buy/create valuable properties and the ‘next big thing’.
They own all or part of assets such as ESPN family of networks, ABC (includes ABC Family,etc), amusement resort parks, Pixar, Lucasfilm/Industrial Light & Magic, A&E Networks (includes A&E, History Channel, Lifetime Network, etc), vast library of animated classics … and much more.
Additionally, they own brands such as the Mickey Mouse Club, the Muppets, Star Wars, Marvel Entertainment, Baby Einstein and many more and are regularly acquiring more of the top global intellectual properties. ’Nuff said (which is a Marvel Comics catch phrase).
Current snapshot of fundamentals: Forward Price/Earnings Ratio (P/E) around 15. Various profit and ROE/ROA margins mostly in the 10 to 20% area. Dividend yield around 1.1% currently. Does have $14 billion debt (cash of around $4 billion), but that seems very manageable. Recent quarterly Revenue growth of 7%, Earnings growth of 12%. (Data from Yahoo Finance).
Taking a quick look at the shorter and longer term charts and technical analysis picture on DIS:
On the Weekly Chart below covering the 2007 market crash, 2009 rebound, to the present, you can see that DIS certainly shrugged off the 07/08 declines very well and quickly and has since pushed much higher on. This bodes well if the broad market does have some weakness in the coming years — which is certainly possible, given the large gains seen in 2012 and 2013.
On the shorter-term Daily Chart below, we’ve focused on basically the last 12 months. The trend in particular from April is worth focusing on — a very choppy range (similar to the broad market S&P 500 Index (SPX) (SPY) range in place over that time frame, actually DIS looks slightly weaker). But the current break above the October range is bullish, by our momentum style trend analysis standards.
Bottom Line: Sometimes as an investor and/or trader, you just have to ‘Keep It Simple, Stupid’ and go with the obvious play. To me, DIS is an example of that. MW