I recently wrote two articles highlighting Disney as an inexpensive growth opportunity for long-term investors. In my opinion, Disney presents a compelling case for long-term investors. My positive sentiment is rooted in many lucrative franchises such as Star Wars, Pixar, Marvel, ESPN and the legacy Disney brand turning out original content such as Frozen and more recently Zootopia. Disney offers a deep and well-diversified product portfolio that is set to provide growth, income and safety well into the future. This portfolio gives rise to a basket of entertainment income streams via movies, licensing deals, theme parks, TV programing, resorts and distribution rights. Disney stock has been under pressure as of late due to increasingly worrisome revenue declines from its ESPN franchise. I feel this decline in the stock is unwarranted, and analysts underestimate the ability of Disney to evolve to the consumer and monetize ESPN via other means. My views were recently echoed by analysts at Pivotal Research which upgraded the stock from a hold to a buy and raised its target price from $104 to $122. JPMorgan Chase also reiterated its buy rating and assigned a $118 target price. Disney has witnessed fantastic growth over the last decade and considering future catalysts in the pipeline; Disney appears undervalued. Disney currently sits at a P/E of ~18 along with a PEG of ~1.5 and has seen its stock fall from $122 to a current price of ~$98 or alternatively a 20% decline. Taking a look at its P/E ratio (currently 18 – in-line with the broader market average) indicates that it’s an average stock and I believe Disney is much more than the average stock. This presents a great buying opportunity in an inexpensive, high-quality growth stock. Continue reading "Disney Continues To Deliver Robust Growth" →
