Is Disney Stock at the End of its Bull Market?
In the large-cap space, there are actually very few big businesses that have provided consistently excellent returns to shareholders over time. However, The Walt Disney Company (NYSE:DIS) is one stock that comes to mind. The media business is all about brands and creativity. Disney’s assets have proven time and time again that they can deliver the goods in terms of financial growth—which has turned into a profitable formula for owners of DIS stock.
Naturally, the studio business is volatile. But the right movie at the right time can be an absolute boon to earnings. The latest Star Wars movie due out in December will likely do just that.
Disney Stock is the Gift That Keeps on Giving
For a number of quarters, Disney’s parks and resorts division has been able to increase prices without adversely affecting demand.
Higher average room rates for hotels and cruises have been mainstay the last while.
In the company’s third fiscal quarter of this year, ended June 27, 2015, total sales improved five percent, but diluted earnings per share grew a solid 13% comparatively.
In Disney’s most recent quarter, the fourth fiscal quarter of 2015, it was the company’s fifth consecutive year of record financial results.
Quarterly revenues grew to $13.5 billion, up about nine percent compared to $12.4 billion. Of note was strength at Disney’s media networks division, which is mostly television channels. This segment improved its total quarterly sales 12% to $5.8 billion.
Fourth-quarter diluted earnings per share improved 10% over the same quarter last year.
More affiliate fees are working for Disney. In previous recent quarters, the company’s media networks sales were flat.
Parks and resorts saw a 10% gain in total quarterly sales over last year to $4.4 billion. The gain was due to increased attendance and guest spending, mostly due to higher room rates. This is a consistent trend we’re getting from Disney.
The company’s cash position in its most recent quarter improved nicely and share repurchases remain robust.
Disney stock’s five-year stock chart is featured below:
Chart courtesy www.StockCharts.com
Disney’s latest quarter beat the Street on earnings and basically met consensus on total sales. While fully priced on the stock market, this media large-cap continues to offer good medium-term prospects for investors.
Disney stock could no doubt experience a consolidation presently. It’s had a very good run this year, outperforming the broader market by a wide margin.
There is still good earnings momentum available to The Walt Disney Company. And that’s due to its studio entertainment division and earnings power from the upcoming Star Wars film release. Next quarter, the first of fiscal 2016 will be a very important metric for the company—and investors.
Disney stock has proven to be an attractive buy when it experiences meaningful price retrenchments. The stock’s latest selloff occurred in August. For the most part, it’s had a good recovery considering where it’s come from.
Going into 2016, Disney media networks business should experience continued momentum. Combined with studio entertainment earnings, it should be another solid year for this Dow component.