Disney: How Profitable Is It To Invest In The American Media Giant?
The Walt Disney Company (NYSE:DIS) is the largest American media conglomerate and one of the leaders of the global animation and entertainment industry.
DIS stock price prediction
The company’s stock has fallen 40% over the past year, and since September 2021, DIS’ yield has been below that of the S&P. By the end of 2022, the company’s earnings are expected to be a record, Thanks to the success of the Disney+ streaming service and the recovery of theme park revenues. Therefore, DIS stock price prediction is quite optimistic.
- The company’s strong results over the past 2 quarters: Disney’s total quarterly revenue rose 26% YoY to $21.5 billion, $0.5 billion above consensus estimates in 3Q2022 and 9% in 4Q22. Adjusted EPS reached $1.75 in October, up from $1.1 a year earlier. The company’s earnings have grown 58.5% over the past year, with an expected average annual earnings growth rate of 29%. DIS stock price history is also trending upward.
- In early 2022, the amusement park segment’s revenues reached pre-2022 levels and continue to grow, with segment revenues of $7.4 billion in 3Q22, and segment results will continue to improve in the future with the reopening of the Shanghai amusement park. If you’re considering an alternative, take a closer look at NIO after hours stock prices.
- The company has achieved increased consumer spending through changes in amusement park pricing: the segment’s revenue and operating profit are already well above 2019 levels.
- The stock trades 36.5% below fair value; upside on the paper is 30% (EV/Sales fwd =2.4; P/S fwd ~1.81). Value multiples remain relatively high (P/E~25.5), but with the prospect of further decline.
- In 4Q22, the number of paid subscribers to Disney+ streaming service increased by 12.1 million to 164.2 million (+26.5 million subscribers in the last 2 quarters). The company is doing well against competition from Netflix (NASDAQ:NFLX), which is recording subscriber churn.
- In December, it launched an ad-supported Disney+ subscription in the U.S. and Canada: the expanded fare lineup will allow the company to attract a broader audience, and Disney plans to build an ecosystem around the Disney+ service in the future.
Risks
Replacing the CEO of Walt Disney in November, on the background of problems and falling revenues in recent quarters – an important issue that will affect the company’s strategy (although the “new” CEO ran the company from 2005 to 2020). That’s why many are considering NIO stock price prediction 2025 analysis for long-term investments. You can follow the project at letizo.com.
The company’s losses in the Direct-to-Consumer segment, i.e. the subscription services business (Disney+, Disney+ Hotstar, ESPN+, Hulu): Disney’s strategy in the streaming segment has been successful for revenue growth, but at the expense of profitability. Rising content creation costs. Disney needs to control costs and reduce debt (Net Debt/EBITDA=3.5), plus the company’s valuation is not cheap.
Increased competition from Netflix: Both streaming giants are shifting their focus to ad collaborations, which will bring significant revenue in the coming years. but the strong subscriber growth numbers are fading as both Disney and Netflix are close to the limit of the maximum number of subscribers they can count on in the U.S.
The company’s net operating flow almost halved in 2022. Low return on equity compared to major competitors (ROE 3% vs. 28% for Netflix). Slowdown of global economic growth and risk of recession in the U.S.
The risk associated with the company’s broadcasting a certain agenda to children’s audiences causes mixed reactions in some countries.
