Disney: Close to Invincible - Barron's

Disney (DIS) shares are up 5% to $34.30 since a bullish cover story in late February. Barron's Michael Santoli thinks the stock is still underappreciated.

It has by far the best brands in media, the strongest balance sheet, the finest international growth opportunities and the best-developed process for cross-selling its characters and content. Yet the stock garners no premium over its large peers.

• Investors continue to focus on perceived softness in theme-park visits. Besides the fact that Disney is not only about theme parks, park attendance and bookings continue to surprise to the upside.
• Cablevision Systems (CVC) paid over 20x estimated cash flow for Sundance; Disney's far more successful ESPN and Disney Channel trade at an implicit 10x.
• Shares trade at just 14.8 12-month forward expectations due to its recent outperformance and rising forecasts.
• Upcoming Pixar film WALL-E could surprise to the upside, considering no one seems to expect much from it.
• Disney is among the lowest volatility stocks in the Dow.

=======================

From Disney's May 6 earnings conference call:

We’ve seen in the last few years a demographic expansion among videogame consumers to basically include younger kids as well as more girls than we saw years back. And that’s a great benefit to Disney, and part of that is due to the success of the Nintendo platforms, both the DS and the Wii. So the Disney name, Disney brand and the products that we are essentially tapping into to make videogames are playing very well on these new platforms across demographics that we would have not seen three, four, five years ago. -- CEO Robert Iger

In a post-earnings interview with CNBC's Julia Boorstin, Bob Iger speaks about Disney's past successes and future plans. He notes digital revenue account for about $2B of Disney's $35B total, but thinks some traditional media firms have it wrong: It's not about a new revenue stream, he says, it's about giving consumers more options about how and where to consume Disney content.

Comments

[deaverb:]

Disney is the premiere brand as Eli emphasizes. The Cablevision data was eyeopening. Wow. Makes Disney look like a bargain--again.

2008 May 11 08:23 AM

[whenthemusi...:]

Sorry, I feel just 'Sleepy' over it.

2008 May 11 01:03 PM

[Tom Q:]

Disney hasn't raised its dividend in years and that is one of the primary reasons for it stagnant trading price as there is no incentive in it for stockholders. The company prospers at the expense of its stockholders.

2008 May 11 05:36 PM

[DIS watcher:]

Disney simply lacks innovation. Samo-samo retreads everywhere one looks. Disney Channel spin-offs...yawn. ESPN is so '10-years-ago.' Parks are aimed at baby boomers and not what's cool today. Walt would be ashamed of Eisner's dismantling of the animation division, and how Iger had to pay $4.1 billion for Job's Pixar. All Iger has done so far is stabilize a dying patient. Now to revive Disney, Iger must take some chances and do (lots of) stuff that's fresh and new.

2008 May 12 02:26 PM

[seeksome:]

Cmon DIS you got everything going for you do something out of the ordinary for you and get this stock price going UP.Take some chances use the talent you have and GO FOR IT! To save big money and get what you want please visit:seeksomething.com

2008 May 14 11:44 PM