I grew up watching the Wonderful World of Disney (DIS) and tuned into the Mickey Mouse Club every day. What boomer my age didn't have a crush on Annette Funicello?
But I know you all want to hear about the stock and don't care about my childhood fantasies. Disney has been on a tear lately and has been on the rise in 11 of the last 20 session this last month. The hourly trading chart provided by Barchart shows a really nice trend over the past month:
Even over the last 6 months the stock has outpaced the market as measured by the Value Line Index. While the Index is up 7% the stock is up over 23% during the same period:
The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. The companys Media Networks segment includes broadcast television network, television production and distribution, television stations, broadcast radio networks, radio stations, and publishing and digital operations. It operates the ABC Television Network and 8 owned television stations, the ESPN Radio Network and Radio Disney Network, and 35 owned radio stations. This segment also produces, licenses, and distributes cable and animated television programming; and operates ABC-, ESPN-, ABC Family-, and SOAPnet-branded Internet businesses.
The company's Parks and Resorts segment owns and operates the Walt Disney World Resort in Florida that includes theme parks; resort hotels; a retail, dining, and entertainment complex; a sports complex; conference centers; campgrounds; water parks; and other recreational facilities, as well as the Disneyland Resort in California. This segment also manages and markets the Disney Vacation Club, Disney Cruise Line, the Adventures by Disney, and mixed-use Disney Resort and Spa in Hawaii; manages Disneyland Paris and Hong Kong Disneyland Resort; and licenses the operations of the Tokyo Disneyland Resort in Japan.
Its Studio Entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings, and live stage plays. The companys Consumer Products segment licenses Disney characters, and visual and literary properties to manufacturers, retailers, show promoters, and publishers; operates The Disney Store and DisneyStore.com; publishes books and magazines; and operates English language learning centers. Its Disney Interactive Media Group segment creates and delivers Disney-branded entertainment and lifestyle content across interactive media platforms, including online, mobile, and video game consoles. The company was founded in 1923 and is based in Burbank, California. [Yahoo Finance profile]
Factors to Consider
Barchart technical indicators:
- 100% Barchart technical buy signal
- Trend Spotter buy signal
- Above its 20, 50 and 100 day moving averages
- 11 new highs and up 7.36% in just the past month
- Relative Strength Index 65.89%
- Barchart computes a technical support level at 42.56
- Recently traded at 45.17 with a 50 day moving average of 42.93
Fundamental factors:
- The stock has been a Wall Street favorite where 27 brokerage firms have assigned 32 analysts to follow the company's numbers
- Those analysts think sales will be up 4.00% this year and another 5.50% next year
- Earnings are the story and are estimated to be up 16.10% this year, an additional 15.60% next year and continue to rise annually at a rate of 12.69% for at least 5 years out
- The consensus numbers resulted in firms sending 4 strong buy, 15 buy, 13 hold and no under perform or sell recommendation to their clients
- If the P/E ratio stays favorable investors could see an annual total return of 12% - 13% over the next 5 years
- The 16.47 P/E ratio for a stock with a double digit earnings growth forecast is not much higher than the 15.80 P/E ratio of the overall market
- The low dividend rate of 1.37% is less than 20% of the estimated earnings
- The company has an A++ financial strength rating
- The Park, Resort, Cable and branded products divisions are having great years
- The losses on the Jack Carter movie is already being offset with a blockbuster Avenger movie
General investor interest:
- This is one of the most widely followed issues by the readers of Motley Fool where 5,228 readers have it on their watch lists
- Readers voted 94% that the stock will beat the market
- The more savvy All Stars voted 97% for the same result
- Firms having the stock on their buy lists include Zack's and Stifel
- Columnists with positive comments include Jim Jubak and Bob Olstein
The market has the final say, and over the past 6 months the stock outstripped its peers. While Disney was up 23% in the last 6 months, News Corp (NWS) was up 6%, Time Warner (TWX) up only 3% and even Viacom (VIAB) was up only 11%:
Summary: Walt Disney Company has been a rising star, and is expected to stay that way. Since all of their revenue is from discretionary spending areas, I advise you to watch the 100-day moving averages and the lower 14 day turtle channel to see when and if the market changes its mind.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
