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Walt Disney Is a Buy

May 21, 2014 | About:

Walt Disney (NYSE:DIS) made history in the second quarter of fiscal 2014. The company recorded earnings per share of $1.11, its highest ever. Walt Disney operates an entertainment company on a worldwide basis. It has media networks, parks and resorts, consumer products and interactive segments. The company was founded in 1923.

Numbers at a Glance

In the second quarter, Walt Disney achieved a 300% increase in its operating income. The company recorded the feat primarily due to the domestic home video release of Frozen. In addition, the film enjoyed a strong theatrical performance overseas. Walt Disney’s revenue went up 10% in the second quarter while its net income was up by 27%. Each of the company’s segments delivered meaningful increases in their operating income.

Initiative for Growth

In the second quarter, the unprecedented global success of Frozen continued. Walt Disney says it is now the world’s highest grossing animated film of all time. The demand for the film’s merchandise remains high.

Walt Disney has also achieved an enormous success with The Winter Soldier. The film has surpassed the first Captain America in its total global box office. Also, Walt Disney has entered the short form video space with its acquisition of top-online video network Maker Studios. Walt Disney hopes that Maker’s production talents will lead to exciting new opportunities to drive value for it in the near term.

Future Projects

Walt Disney’s Avengers Age of Ultron is currently shooting an early footage. Walt Disney intends to achieve a strong domestic opening for the film in 2015. The film will bring Marvel Universe’s biggest heroes together to face one of their biggest villains.

Walt Disney hopes to introduce the world to more fantastic Marvel storytelling in the near future. With a great cast of new characters, Walt Disney believes Guardians of the Galaxy has a strong franchise potential. The company has announced that its Infinity 2 will feature The Avengers and other Marvel and Disney characters when it is introduced in the fall.

Head to Head

Walt Disney faces a strong competition from Twenty-First Century Fox (NASDAQ:FOXA) and Time Warner (NYSE:TWX). Compared to these rivals, Walt Disney has an edge as it provides an extraordinary creative portfolio that it leverages across the entire company. From the enormous success of its movies, it is clear Walt Disney has very successful creative products in the market.

Wings Across the World

Walt Disney operates resorts in France, Hong Kong, China, as well as licenses to operate Tokyo Disneyland Resort.

A Glance at Greater China

Walt Disney has continued its construction of Shanghai Disney Resort. The company estimates 330 million potential guests within a three-hour travel radius of the resort. By the time it opens in late 2015, Walt Disney expects China’s travel market to be 34% bigger than it was in 2012.

On a Concluding Note

Walt Disney is diversified across the major segments in the entertainment sector. Another remarkable advantage is that it has an impressive operating income. Walt Disney is in a solid financial position. It will continue to provide good returns to investors going forward.

Rating: 4.0/5 (1 vote)



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