The Walt Disney Company NYSE:DIS
Market Cap: $191.6 billion | Exchange: NYSE | Index: Dow Jones, S&P 500
The Walt Disney Company’s entertainment empire is worldwide and world famous, and movies form a major part of that success. As well as its own productions, Walt Disney has purchased three movie studios in recent years: Marvel Entertainment, Pixar and Lucasfilm.
Before the release of The Force Awakens, our senior market analyst Chris Beauchamp took a look at the performance of the company behind the film.
“Long-term Disney shareholders have enjoyed one of the biggest rallies of the past few years, with the price increasing 226% since late 2010 versus a 75% gain for the S&P 500. Thus, the 1% bounce in the share price following the release of the latest trailer for Star Wars Episode VII will have been of little importance for those with a longer view. However, it underlines how important the new trilogy is expected to be for the firm.
It is not just Star Wars either. A series of successes with big titles such as Frozen and Captain America: The Winter Soldier helped to send revenues up 8% in FY 2014, while profits rose 21% to $13 billion.
Crucially, while the overall performance of the industry is expected to be strong this year – with box-office collections expected to move past $11 billion, benefiting Comcast, Lions Gate and others – it is Disney that combines strong business performance with a compelling valuation. While the overall earnings multiple for the industry sits at 38.8, Disney trades at just 22 times earnings, with growth currently running at 10.5%.
In the past six quarters, Disney has beaten expectations by around 10%. We can expect the addition of the Star Wars films, plus the merchandising and theme park rides that come with it, to help maintain this performance. The Force, it seems, is with them.”
IG analyst Alastair McCaig says: “The ultimate success of [The Force Awakens] will be down to toy sales. The Force Awakens has the backing of Disney, LEGO and Hasbro, which should ensure merchandising sales outweigh box office returns and, equally importantly, produce a steady flow of new fans growing up along with these new films.”
The Walt Disney Company is a component of the Dow Jones and the S&P 500. Learn more about indices trading.