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Disney Looks Impressive, Hits New High

Zacks Equity Research

Shares of The Walt Disney Company (DIS) have gained momentum since the company released its first quarter fiscal 2014 results on Feb 5, 2014. Since the release, the stock price has moved up by 7.4%.

Also, it touched a 52-week high of $77.31 yesterday, eventually closing at $77.06. This Zacks Rank #2 (Buy) stock amassed a return of nearly 41% over the past one year.

Results were propelled by double-digit revenue growth across Studio Entertainment, Consumer Products as well as Interactive businesses. Revenues came in at $12,309 million, up 9% year over year. Moreover, it surpassed the Zacks Consensus Estimate of $12,279 million.

The company’s adjusted earnings came in at $1.04 per share, beating the Zacks Consensus Estimate of 91 cents and surging 32% year over year. Investors remained optimistic about the stock’s performance as on an average Disney has delivered a positive earnings surprise of 6.3% in the past 20 quarters. Its long-term EPS growth rate is 11.1%, in line with the peer group.

The worldwide media entertainment company currently trades at a forward P/E of 19.4x, a 10.2% premium to the peer group average of 17.6x. The last traded price is nearly 4% below the Zacks Consensus average analyst price target of $80.29. Average volume of shares traded over the last 3 months stands at approximately 7,066K.

Walt Disney is one of the world's major diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, which endows it with a strong competitive advantage and strengthens its well-established position in the market.

Further, Disney has entered into several content distribution agreements with companies such as Comcast (CMCSA) and Netflix, Inc. (NFLX), which enhance its multi-channel subscription model by increasing the number of platforms to deliver content.

We believe that barring the near-term headwinds, the company remains well positioned to sustain its robust performance on the back of Parks and Resorts, as well as the Studio and Media Networks divisions.

Other than Disney, Michael Kors Holdings Ltd (KORS) and The Hershey Company (HSY) also reached highs of $95.76, and $102.10 respectively, on Feb 10, 2014.

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