Disney (DIS) Shares Are Significantly Undervalued
Consider Disney (DIS) Shares Following Recent Upgrades From Analysts
Is Disney (DIS) A Good Stock Buy Despite A Recent Rally?
The Walt Disney Company (NYSE:DIS) shares soared significantly in the last couple of months, buoyed by the future projects and strong financial performance in FY2016. Although DIS stock soared nearly 18% in the last three months to the highest level in the thirteen months, the company’s future fundamentals and lower valuations suggest further upside in the coming days.
In addition, several analysts, including Morgan Stanley and Piper Jaffray, increased their price targets for Walt Disney’s stock price. Morgan Stanley increased DIS shares to Overweight with a price target
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Jaffray said "Based on our analysis of the upcoming projects across Parks and Resorts, the future film slate at the Disney Studio and its impact on Consumer Products, we are raising our average annual growth expectations by 100bps over the next four years".
In spite of a recent share price rally, DIS stock also appears undervalued considering its lower valuation compared to the industry average. Its stock is trading around 19 times to earnings and 4 times to book ratio, when the industry average is hovering around 21 and 4.4 times, respectively.
Fiscal 2016 was its sixth successive year of record results, supported by the opening of Shanghai Disney Resort, its Studio’s record-breaking $7.5 billion in total box office and the phenomenally successful return of Star Wars.
The company also looks in strong position to extend its strong performances in FY2017, due to its continued investments in its brands and franchises, technological capabilities, and global presence.
On the other hand, Disney’s strategy of strengthening its balance sheet and improving its cash conversion ratio will allow it to fund growth projects. Its debt to equity ratio stands around 0.4, when the industry average is around 1. Last year, the company generated almost $8.4 billion in free cash flows, compared with dividend payments of $2.3 billion. Overall, DIS has several positive catalysts that are likely to support its share price
One of these media giants is the Walt Disney Company (Disney). Its dramatic growth from a small company to become an oligopolist in the media industry offers an interesting
Former CFO Rasulo said, “Almost every aspect of the company is oriented around brands and franchises.” Disney does a fantastic job interconnecting their brands and franchises in order to make each as successful as possible. This is evident in the ways that they build each brand and franchise off of each other and then back off themselves. Consequentially, Disney is able to continue to grow their products.
While analyzing AT& T a few differences are noted. As with Verizon, the current ratio did improve with an increase of five percent from 58% in 2005 to 63% in 2006. However, even though debt to equity decreased for both companies AT & T's decrease was only 4% compared to Verizon's significant decrease of 23%. The net profit margin ratio did opposite changes between the two companies while Verizon's increase not even one full percent AT &T's decreased by almost 3%. Even with these significant changes AT & T's price to earnings, as of 2006, was at 20.89 (www.hoovers.com). These variances tell us a couple of things. First, that AT& T has taken on more debt in 2006 versus 2005, but along with that debt they have been able to increase their net profit margin, helping the company in the way of earnings. The strong price to earnings ratio of 20.89 also shows that the shareholders are not faring too poorly either.
So first we will look at if Disney’s profits are harmed, let's take a look at what disney is worth: “Disney currently has about 1.61 billion shares outstanding. With a share price of around $94 per share, that puts Disney's market capitalization at roughly $150 billion.”-The Motley Fool. Looking at evidence
The decreasing share price of Disney happened suddenly, because of its poor performing assets. The $19
Overall Disney is in a better financial position than its competitors Time Warner and Fox. Disney’s financial ratios have been rising at a pretty consistent rate which shows Disney’s stability and
As one can see in Exhibit 1 in (1), revenues under CEO Eisner had risen from $1,656 billion (1984) to astonishing $25,402 billion. Also, shareholder return increased dramatically. Disney’s stock value relative to the S&P500 (represent the overall performance of the stock market) went up from “1” ($100 million/$100 million) in 1984 to around “2,649” ($3,226 million/$1,218 million) in 2000. Thus, Disney under Eisner generated an amazing “26%” annual total return to shareholders (2).
* This represents 11.58% (=33,712,600 / 291,033,000) of 1984 operating income before corporate expenses, a percentage which is more common to grow, since Disney itself will probably not grow as rapidly as its JPY royalties
Disney has become a marketing goliath and the #1 entertainment company in the US. They have been able to develop a creativity-driven philosophy that over time was tempered by financial responsibility and that benefitted from powerful synergies between its divisions. From the very beginning, Disney has been synonymous with innovation within the children’s entertainment industry, from their introduction of animations with synchronized audio, full-length animated feature films and then later into theme parks and on-ice and Broadway shows. One important element of Disney’s success was the extent to which they integrated and expanded into different
Disney’s enterprise value also increased, from $179.8 billion to $200.7 billion which shows growth. Disney gives the impression of being careful with its borrowings since its debt to equity has been steady from 2010 to 2015. Net margin is typically considered a good metric since it provides how much profit earnings for common shareholders. From 2006 to 2015, Disney's net margin average was 12.44%.
The Walt Disney Company (DIS) has a history marked with ups and downs. Taking numerous risks, expanding internationally, acquiring various businesses and diversifying its operations; the company has emerged stronger than ever. Ranking #53 on the Fortune 500, DIS has experienced continuous growth for the past 5 years, with bright prospects. Detailed analysis shows the market undervaluing the stock despite its healthy performance, indicating potential future gains.
Introduction: The Walt Disney Company is on the threshold of a new era. Michael Eisner has stepped down from his position as CEO and turned over the reigns to Robert Iger. A lot of turmoil has been brewing through the company over the last four years; many people are hoping that this change in leadership will put Disney back on the road to success. Issues began around mid-2002; when declining earnings, fleeing shareholders, and
Financially, Iger managed to steadily increase share prices from a 2005 average of $25 to an average of around $34 in 2007 (Barnes, 2010). Despite a global recession which halted consumption of products and visits to its theme parks, the company has seemingly recovered its low of $15 in 2009 with its share prices reaching almost $38 as of May 2010. As I will explain however, the strategic change at Disney has not only provided short-term profits, it has put the company in a position in which it can sustain its competitive advantage in the long-term due to the changes in the structure and underlying culture of the organisation.
The Walt Disney Company is one of the largest media and entertainment corporations in the world. Disney is able to create sustainable profits due to its heterogeneity, inimitability, co-specialization and immense foresight. During the late twentieth century, Michael Eisner founded and gave a rebirth to Walt Disney Company. Eisner revitalize TV and movies, Themes Park and new businesses. Eisner's takeover for fifteen years had climbed the revenues and net earnings of the company. It also successfully uses synergy to create value across its many business units. After its founder Walter Disney's death, the company started to lose its ground and performance declined. Michael Eisner became CEO
As Walt Disney Company is famed for its creativity and strong global brand, Disney appear to create value in its business primarily through a differentiation strategy.