The Media Juggernaut
I’ve been a long bull of The Walt Disney Company (NYSE:DIS) stock, particularly since the post-ESPN induced sell-off in throughout 2016. Since the lows of October 2016, Disney has seen a huge appreciation in stock price, breaking out to above $115 per share level as of late. This upswing has been on the heels of multiple catalysts such as of reporting record annual results, breaking the all-time worldwide box-office record, witnessing a slew of analyst upgrades, Iger extending his contract as CEO, ESPN woes subsiding, Shanghai Disney opening and Disney’s movie line-up announced through 2020. This inflection point coincided with Doctor Strange, Moana and Star Wars Rouge One in Q4 of 2016 followed by a record opening for its live action film, Beauty and the Beast. The stock fell from the $120s in late 2015 to the high $80s and had been stuck in the $80-$90 range all throughout 2016. This perpetual slump was almost entirely attributable to the decrease in ESPN subscribers and subsequent revenue and profit declines from that franchise. The ESPN franchise within the Media Networks segment generates revenue/operating income that is disproportionate to the amount of the company’s overall revenue and operating profit. Thus, one can see why investors were spooked after consecutive significant declines in ESPN subscribers and thus financial numbers over the past three years. Excluding ESPN, Disney has been executing well and reporting record numbers throughout all of its other business segments. Disney has a deep and diversified enough entertainment portfolio that made a compelling case that these ESPN fears were being overblown. Disney offered and still offers a compelling long-term investment opportunity considering the growth, pipeline, diversity of its portfolio, share repurchase program and dividend. Continue reading "Disney: The Media Juggernaut Continues Hot Streak"