Is There Any Magic Left in Disney?

By Ryan Guenette - July 18, 2012 | Tickers: CBS, TWX, VIAB, DIS | 0 Comments

• Email
• Print

The trading day for November 12^th, 1957 begins with a new face on Wall Street. A face Wall Street has never seen before, the face of a mouse. Known as Walt Disney Production, this company has brought thousands of smiles to little children through its movie productions such as, Snow White and the Seven Dwarfs, and its Disneyland and Disneyworld parks in California and Florida. Having existed for 34 years already at this point, Walt Disney Productions is a family staple and is widely known by the citizens of the United States. The management of the company celebrates as Walt Disney begins its first day of trading at $13.87.   

Now nearly 55 years later, The Walt Disney Company (NYSE: DIS) is set to open at $48.19, handing initial investors 266,734.32% returns over the 35 years, not including dividends. Presently, The Walt Disney Company is one of the largest companies in the world, having nearly 156,000 employees. The Walt Disney Company is now a global brand that has created numerous timeless characters, and found a way to monetize them. Currently, the Walt Disney Company has five parks in the world. Below is a map of Walt Disney’s global reach in terms of its theme parks. So can Disney continue to offer magical gains to its investors over the coming years?

Enchanting Growth

The Walt Disney Company’s reported earnings per share for 2010 hit $2.07. In 2011, Disney’s earnings per share grew 21.73% to $2.52. This growth rate was one of the highest in Disney’s respective industry. In 2012, this number is expected to rise to $3.05, representing 21.03% growth. This displays Disney’s consistency in its growth prospects. Based on the average consensus, earnings per share in 2013 is anticipated to reach the $3.48 level. Once again this exhibits magical growth from Disney as the year over year growth rate will reach 14.09%. The Walt Disney Company is one of the only companies in the media sector that is expected to offer double digit growth over the coming years.

The Walt Disney Company is going to derive this spectacular growth from its interactive media division. This sector saw 7% growth from 2009 to 2010, and 29% growth from 2010 to 2011. The interactive media sector includes multi-platform games for global distribution. Much of the growth stemmed from the interactive media division was derived from the online and mobile subdivision, as the world is quickly shifting to mobile games and devices. Disney should be perfectly positioned to take advantage of this changing environment. Just take a look at Disney’s sales, operating profit, net income, net margin, and operating margin over the coming years. 

Dividend is Safer than Mickey’s Ears

Unlike many companies on the public market, Disney pays out annual dividends instead of paying out quarterly dividends. Disney’s annual dividend is currently $0.60, which yields 1.25%. Disney has been paying out dividends for 25 straight years, starting in 1987. Until the end of 1998, Disney paid out quarterly dividends, and then switched to annual payouts. Disney’s explosive growth significantly supports its dividend payouts, and will allow the dividend to grow. Based on the average consensus, Disney’s current dividend of $0.60 has already surpassed the estimated dividend for 2012. In 2013, Disney’s dividend is expected to rise to $0.66. This displays 10.00% year over year dividend growth. In 2014, The Walt Disney Company’s dividend is anticipated to reach $0.71. This rise in the dividend displays 7.57% year over year dividend growth. Disney’s dividend is not going to make the stock an income investor’s paradise, but will add some assuring value to the stock over the coming years. Just look at Disney’s earnings per share, dividend, and the payout ratio (the percentage of net income that is paid out in the dividend) over the forthcoming years. 

Is Disney the Prettiest Princess in the Group?

Compared to its competitors such as, CBS Corp. (NYSE: CBS), Time Warner Inc. (NYSE: TWX), and Viacom Inc. (NASDAQ: VIAB), Disney seems to rank favorably in most company fundamentals.

According to DailyFinance.com

The Walt Disney Company is the largest company in its sector, making Disney the most stable company in the sector as Disney is more immune to market fluctuations in certain economies. Additionally, Disney has the fastest growing dividend in the sector, which will handsomely reward investors over time. Disney also seems to have the most stable growth in sector.

The Foolish Bottom Line

The Walt Disney Company has provided fairy-tale like gains to its investors during the past 35 years. In the future, gains like these will not be handed to investors. Instead, slower-paced growth will lead to greater correlation between Disney and the overall market. Even though there will not be many explosive years ahead for Disney, there may still be a little magic left in Disney.     

• Email
• Print
• Feedback