Founded in 1923, The Walt Disney Company (DIS, Financial) is headquartered in Burbank, California. As part of the services sector, Disney is one of the oldest and most well-known companies in the entertainment industry of the U.S. The segments wherein the company operates can be broadly categorized into five categories: studio entertainment, parks and resorts, interactive, consumer products and media networks. The company operates in many countries of the world and the number of its employees is 180,000. Key competitors of the company are NBC Universal Media, LLC, Twenty-First Century Fox, Inc. (FOXA, Financial) and Time Warner Inc. (TWX, Financial).
The financial performance of the company in the past three years has been great. The revenues and profits of the company have invariably increased during this period. DIS’s sales revenues from $42,278 million in 2012 have increased to $48,813 million in 2014. The increase in sales revenues in 2013 and 2014 was 6.54% and 8.37%. The corresponding increase in the gross profit of the company in the same years was 6.36% and 11.93%. The proportional increase in gross profits was greater than the proportionate increase in sales revenues, which reveals the increasing efficiency of the company and the success that it has achieved in controlling its costs. The proportionate increase in the net incomes of the company vis-à -vis sales revenues was even more impressive. The net income in 2013 and 2014 increased by 7.99% and 22.25% respectively and thus giving investors something to leap for. The overall profitability of the company has ameliorated, and it has been greatly successful in converting its revenues to profits.
The financial analysis of a company cannot be complete without interpreting the figures contained in its statement of cash flows. More than revenues and profits, what matters is cash, for out of it a company pays dividends and makes payments to its creditors. The company’s cash flows from operations in 2013 and 2014 increased by 18.65% and 3.47% respectively. The company is performing great in almost every area of financial performance.
The ability of a company to increase its revenues and profits hinges upon a host of factors. The most important factors are a company’s operating capacity, efficiency and ability to capitalize upon any opportunity, which it gets. DIS has continuously invested in increasing its capacity and efficiency. Total capital expenditures of the company in 2014 were $9,780 million. The increase in capital expenditures in the preceding fiscal year was 18.42%. Benefits from the increased capital expenditures are likely to be realized in the future resulting in increased earnings and profits for the company.
The current market price of DIS’s sock is $110.90. The 52-week range of the company’s stock price is $78.54 to $111.66. The price is expected to increase further in the coming months. The P/E of the company is 24.86, and its EPS value is 4.50. The company has a beta value of 1.1, which reveals that its stock’s volatility is greater than that of the market.
We have sufficient reasons to assert confidently that the revenues and profits of Disney will continue increasing as the U.S. consumer confidence, employment, household incomes, aggregate demand and manufacturing activity is greatly improving. It will make individuals spend more on entertainment and products offered by companies supported by discretionary goods and services. The future of Disney seems bright and promising.
