Disney's Growth and Netflix's Valuation Parity

Noah Kiedrowski - INO.com Contributor - Biotech - Disney's Growth


Content Juggernaut:

The Walt Disney Company (NYSE:DIS) just posted back-to-back record-shattering $200-plus million weekend openings at the box office in its Marvel franchise posting $202 and $258 million for Black Panther and Avengers: Infinity War, respectively. Wall Street hasn’t seemed to notice nor recognize Disney’s box office feat as of late. Black Panther shattered all previous President’s Day weekend records and became the third highest grossing movie of all-time domestically and ultimately grossing $1.34 billion worldwide and becoming the eighth highest grossing movie of all-time. Avengers: Infinity War posted the biggest box office weekend of all-time with $258 million while breaking the previous record set by Star Wars: The Force Awakens by $10 million. Avengers went on to set a new worldwide record over its opening weekend, posting $630 million in box office gross. In its first 11 days of release, Avengers: Infinity War grossed over $1 billion worldwide, making it the fastest movie to reach that milestone without any help from the Chinese market. Disney is in its own league and competing with itself at the box office with its Marvel and Star Wars properties. Which begs the question, is content really king as Disney is ignored and Netflix has reached parity with Disney in terms of market capitalization?

Ant-Man and The Wasp, Solo: A Star Wars Story and The Incredibles 2 are around the corner. Meanwhile Disney's Parks and Resorts are posting strong growth while shoring up its stalling Media Networks segment with a confluence of growth catalysts via streaming with Hulu (30% stake and will likely be expanded to a majority 60% stake after the Fox acquisition), BAMTech, Sling, ESPN streaming service and a Disney branded service coming in 2019. Disney is closing the gap in streaming as Hulu grows much more rapidly than Netflix and in the backdrop, ESPN and direct to consumer Disney branded streaming service comes to fruition. Disney recently reported Q2 FY2018 revenue growth across every business segment with overall revenue growth of 9%. Disney offers a compelling long-term investment opportunity considering the growth, Fox acquisition, pipeline, Media Networks remediation plan, diversity of its portfolio, tax reform, share repurchase program and dividend growth. Continue reading "Disney's Growth and Netflix's Valuation Parity"

The Worst Is Over For Hasbro

Noah Kiedrowski - INO.com Contributor - Biotech - Hasbro


Introduction:

Hasbro Inc. (NASDAQ:HAS) released earnings that were rife with headwinds attributable to the bankruptcy of Toys"R"Us. Hasbro reported a year-over-year overall revenue decline of 16% and missed on EPS by $0.24. Hasbro cited the liquidation of Toys"R"Us and retail inventory overhang, primarily in Europe, as drags on revenue domestically and internationally. Revenue in North America fell 19% while international revenue fell 17% year-over-year during the quarter. Despite the negative headline numbers, the stock bounced to the upside after the earnings call commentary painted a positive long-term narrative while weathering the Toys"R"Us liquidation. The stock responded by moving from $79 to $87 or 10% to the upside post-earnings. Hasbro is navigating the challenging retail landscape and provided positive commentary on the conference call for future growth avenues. As the company realigns and efficiently manages the Toys"R"Us liquidation, this challenging backdrop will likely resolve to Hasbro's benefit as there are many current and future growth catalysts despite the supply chain disruption.

Hasbro has many current and future growth catalysts with major billion dollar movie franchises in the fray while riding the coattails of Black Panther into the home entertainment window which posted record-breaking numbers with $685 million domestically and $1.33 billion internationally at the box office. Combine this success with the upcoming Marvel and Star Wars movies including Avengers: Infinity War, Star Wars Han Solo and Ant-Man and The Wasp to highlight a few major films. Hasbro recently increased its dividend from $0.57 to $0.63 per share. Hasbro has excellent Q2-Q3 2018 catalysts, boasts a ~3% dividend yield, weathering the Toys"R"Us liquidation and putting forth initiatives within Hasbro Studios to further propel growth thus presenting a compelling long-term buy. Continue reading "The Worst Is Over For Hasbro"

Hasbro: Positive Earnings and Growth Ahead

Noah Kiedrowski - INO.com Contributor - Biotech - Hasbro Inc.


Introduction and Backdrop:

Hasbro Inc. (NASDAQ:HAS) just released earnings, and the stock shot up from $94 to $103 or 9.5% as a result of navigating the challenging retail landscape and positive commentary on the conference call for future growth avenues. In mid-summer of 2017, Hasbro had witnessed a two-leg sell-off from its 52-week high of $116 to $88 or a 24% slide. The first leg down was from $116 to $95 followed by a second leg down from $95 to $88. These sell-offs were primarily due to retail softness and lowered guidance due to the Toys R Us bankruptcy filing which drove the stock down to $88. Hasbro was faced with a challenging environment and had to lower its guidance through the holiday season. The stock has been trading erratically since mid-summer of 2017 with 10% swings in the stock price. Ostensibly, Hasbro looks to be turning the corner and effectively managing this challenging backdrop and forging ahead with many current and future growth catalysts.

Hasbro has many current and future growth catalysts with major movie franchises, specifically with Marvel and Star Wars. Thor: Ragnarok and Star Wars: The Last Jedi rounded out 2017, posting worldwide box office gross of $854 million and $1.33 billion, respectively. Black Panther posted record-breaking numbers in its debut with $235 million domestic opening at the box office over the Presidents Day weekend. Upcoming Marvel and Star Wars movies include Avengers: Infinity War, Star Wars Han Solo and Ant-Man and The Wasp to highlight a few major films. Taking into account Hasbro’s growth, the potential acquisition of Mattel, Q1-Q2 2018 catalysts, trading at a P/E of ~20, boasting a 2.4% dividend yield and initiatives within Hasbro Studios to propel growth further presents a compelling long-term buy. Continue reading "Hasbro: Positive Earnings and Growth Ahead"

Disney: Black Panther Setting The Pace

Noah Kiedrowski - INO.com Contributor - Biotech


Setting The Pace and FY2018:

The Walt Disney Company (NYSE:DIS) is fresh off reporting its first quarter for FY2018 and has set the stage for a strong year ahead. The studio segment is off to a great start with record-breaking movie releases such as Thor: Ragnarok, Star Wars: The Last Jedi and Coco surpassing $854 million, $1.33 billion and $715 million in worldwide box office receipts, respectively. Black Panther entered the fray with a record-breaking President’s Day weekend opening of $185 million in domestic box office sales. Disney has one of its biggest movie slates for FY2018 with Ant Man and The Wasp, The Avengers: Infinity War, Solo: A Star Wars Story, The Incredibles 2 and Mulan (live-action film) around the corner. Parks and Resorts are posting strong growth where revenues grew 13% year-over-year in Q1, and operating income now surpasses its Media Networks segment income, bringing in $1.35 billion vs. $1.19 billion, respectively. Disney is aggressively trying to shore up its stalling Media Networks segment with a confluence of growth catalysts via streaming with Hulu (30% stake and will likely be expanded to a majority 60% stake after the Fox acquisition), BAMTech, Sling, ESPN streaming service and a Disney branded service coming in 2019. Disney is evolving to address the deteriorating Media Networks business segment with major streaming initiatives. Disney offers a compelling long-term investment opportunity considering the growth, Fox acquisition, pipeline, Media Networks remediation plan, diversity of its portfolio, tax reform, share repurchase program and dividend growth.
Continue reading "Disney: Black Panther Setting The Pace"

Disney: Fox Acquisition, Streaming, and Tax Reform

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

FY2018 is off to an excellent start for The Walt Disney Company (NYSE:DIS) with a confluence of growth catalysts via streaming, studio strength, Fox acquisition and tax reform legislation. Disney has been establishing a firm footing in the streaming space via Hulu (30% stake and will likely be expanded to a majority 60% stake after the Fox acquisition), BAMTech, Sling, ESPN streaming service and a Disney branded service coming in 2019. The studio segment is off to a great start with record-breaking movie releases such as Thor: Ragnarok and Star Wars: The Last Jedi surpassing $850 and $900 million in worldwide box office receipts, respectively. Disney is evolving to address the deteriorating Media Networks business segment with major streaming initiatives. Disney has one of its biggest movie slates for FY2018 with Blank Panther, The Avengers: Infinity War and Solo: A Star Wars Story around the corner. Disney also announced that it is acquiring 21st Century Fox’s assets to further drive growth for $52 billion. This acquisition brings in noteworthy studio assets such as more Marvel properties (X-Men, Fantastic 4 and Suicide Squad) and Avatar along with TV content, regional sports and a 60% majority stake in Hulu. Disney currently pays a 33% effective tax rate and now with tax reform signed into law; this rate will be dramatically reduced a third to 21%. Disney can deploy more cash into growth initiatives and return value to shareholders via increased dividends and share buybacks with the increased cash flow. Disney offers a compelling long-term investment opportunity considering the growth, Fox acquisition, pipeline, Media Networks remediation plan, diversity of its portfolio, tax reform, share repurchase program and dividend growth.

Transformative Fox Acquisition

Disney shelled out $52 billion to acquire many of Fox’s assets to drive future growth in regional sports, movies, TV programming and foreign market penetration. This is a transformative acquisition as Disney will take control of the movie studio and significant TV production assets and gain exposure to international markets through Fox’s networks via a 39% ownership of Sky (Figures 1, 2 and 3). In addition to the movie studio, TV production and international assets such as Star and Sky, Disney will also add entertainment networks such as FX and National Geographic. Bob Iger stated that the deal should close in 12-18 months and highlighted the chance to expand Fox's Avatar franchise particularly considering new theme park lands. In addition to expanding the Marvel Universe via X-Men, Fantastic Four, and Deadpool, Disney will obtain Fox's distribution rights to the first Star Wars film. The deal will be accretive to EPS for the second fiscal year after closing, says Disney CFO Christine McCarthy, and Disney expects roughly $2B in cost synergies by 2021. Taking a majority stake in Hulu will further accelerate Disney’s streaming capabilities and compete directly with Netflix (NFLX). Taking majority control of Hulu is going to be beneficial and result in "flowing more content in Hulu's direction," and managing Hulu "becomes a little more clear, a little more effective." Turning to sports, combining Fox’s sports content with Disney’s ESPN will be synergistic and a "perfect complement" to ESPN's offerings, which are national in nature and will benefit from regional focus, Iger says. Continue reading "Disney: Fox Acquisition, Streaming, and Tax Reform"