An entertainment company operating worldwide, The Walt Disney Co. (DIS, Financial) was founded in 1924 and is headquartered in Burbank, California. The company is currently operating in five segments, which include Studio Entertainment, Parks and Resorts, Media networks, Consumer Products and Interactive. Its cable networks include one of the most famous TV channels like ESPN, a sports channel, Disney channels, UTV, Hungama and ABC family. It also owns theme parks and resorts in many parts of the world. In short, DIS is a complete entertainment company catering to the needs to different market segments with distinct demand. The key competitors of the company are NBC (NBC, Financial) Universal Media, LLC, Twenty-First Century Fox, Inc. (FOXA, Financial) and Time Warner, Inc. (TWX, Financial). Comparing Disney’s performance with that of its competitors we find out that financially DIS is by far one of the strongest corporations in the industry. It provides employment to 180,000 people worldwide, and its major competitors jointly provide 52,600 jobs.
The price of the company’s share has in the past five years increased by approximately 280% from $29 to $110.81. The current market price of the Disney’s share is $110.22 and in the past 52 weeks, it has fluctuated between $109.61 and $111.96. Quite stable has the stock been during the period, which reveals the low volatility of the company’s share price. The EPS of the company is $4.50 and the P/E Ratio is 24.50. Higher P/E Ratio reveals that the investors are expecting greater gains on investment in the future. By the end of the current fiscal year, DIS’s stock price will be somewhere around $115. The uptrend is expected to persist.
The future market performance of a company’s stock can be predicted in the light of the historical data keeping in view certain areas of company performance like revenues, net income, cash flows, etc. Disney’s total revenues have been continually increasing in the past three years. In 2013, they increased by 6.54% and in 2014 by 8.37%. Net income has also increased in 2013 and 2014 by 7.99% and 22.25% respectively. A greater proportional increase in the net income than that in sales revenues indicate that the company’s profitability in efficiency has greatly enhanced. The company’s cash flows from operations as well as its core business activities in 2013 increased by a substantial 18.65% and in 2014 by 3.47%. It has also been continually spending on improving its Property, Plant and Equipment. Capital expenditures by the corporation will help it enhance its revenues and profits even further in the future.
Disney is part of the entertainment industry of the U.S. Its financial performance depends upon the overall economic environment of the country. During tough economic times, companies supported by discretionary goods and services suffer more than those that deal in necessities. Now that the economy is fast recovering, unemployment is decreasing, and the aggregate demand is registering positive changes, the demand for Disney’s products is expected to increase. Increasing consumer confidence is expected to earn the corporation historic revenues. The current year revenues of the company are expected to be $52.39 billion, which will increase to $56.06 billion in the next financial year. However, the appreciating U.S. dollar will reduce its revenues in terms of the local currency. Nevertheless, Disney stocks are expected to remain positive and earn both revenue and capital gains for the investors.
