I recently wrote a piece highlighting Disney as an inexpensive growth opportunity for long-term investors. My positive sentiment was 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 Zootopia. Disney offers a deep and well-diversified product portfolio that is set to provide growth 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 the ESPN franchise. I felt 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 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 ~$100 or alternatively a ~20% decline. This presents a great buying opportunity in an inexpensive, high-quality growth stock.
Are Hasbro Results A Harbinger for Upcoming Disney Earnings?
Disney and Hasbro have established a mutually beneficial partnership as Hasbro’s recent quarterly sales increased by 16%. This double-digit increase in sales was largely attributable to the sales of Disney’s Star Wars and Princess franchises. Overall, Hasbro’s revenue grew to $831.2 million from $713.5 million during a time that is typically slower for toy makers. Hasbro’s strong numbers benefited from the late 2015 release of the new Star Wars film. CEO Brian Goldner stated “Retail and consumer demand for Star Wars remained very high” and that Hasbro’s line of Disney Princess characters was “very positive.” The Disney and Hasbro relationship is being leveraged for future movies such as the upcoming Captain America Civil War film as well. Continue reading "Are Hasbro Results A Harbinger For Disney Earnings?"
