Must-know: Will Disney's incredible run continue?

Must-know: Will Disney's incredible run continue? (Part 1 of 7)

Must-know: Can Disney extend its impressive returns?

Investors have faired well

Following Disney’s (DIS) notable 44% return in the year-to-date period, investors are likely questioning whether the performance can extend. While media stocks as a whole have been solid performers, Disney has several unique aspects that present a challenging analysis and make it difficult to compare directly with peers. Disney is a member of the PowerShares Dynamic Media Portfolio ETF (PBS), which seeks to provide exposure to an index of media stocks.

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Disney’s components

The Walt Disney Company comprises several components and discloses its financial results accordingly. The Media Networks segment comprises the company’s broadcast and cable television networks, such as ABC, ESPN, the Disney Channel, ABC Family, A&E, and SOAPnet. The Parks & Resorts segment of course operates the company’s renowned Disney theme parks, as well as its cruise lines. The Studio Entertainment segment produces motion pictures. The Consumer Products segment designs and publishes products based on the Disney brand and logos. Finally, the Interactive segment creates and sells video games.

The many segments Disney operates can create a challenge for analysts attempting to forecast financials and produce a valuation of the enterprise. In this series, we’ll explore the various segments in order to more completely understand the firm and its future growth prospects.

The Realist Discussions

  • Quality1

    While all the comparisons attempt to rationalize a buy, sell or hold within each operating segment, no notation has been made for the Marvel and Lucas acquisitions. Operating segments vary based on popularity. The movie and media segment could be the unpolished diamond while Disney monetizes Marvel and the Star Wars franchise. Synergistic energy with crossover into each segment deserves a bit of value. In other words the whole is worth more than the individual segments. Available cash is high and recent completion of capital expansion has turned cash out into cash in. Stock buy backs are another key to valuation. Consolidation around 70 and moves up with economic recovery.

    • SisyphusRolls

      It’s hard to understand a discussion of Disney’s prospects that does not consider the Marvel and Star Wars franchises as likely drivers of growth across Disney’s properties. Star Wars in particular has only been money out, with basically no money in at this point. So Star Wars is basically all future EPS growth.