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Does The Walt Disney Company's (NYSE:DIS) Past Performance Indicate A Stronger Future?

Simply Wall St

When The Walt Disney Company's (NYSE:DIS) announced its latest earnings (30 March 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Walt Disney's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not DIS actually performed well. Below is a quick commentary on how I see DIS has performed.

Check out our latest analysis for Walt Disney

Did DIS's recent earnings growth beat the long-term trend and the industry?

DIS's trailing twelve-month earnings (from 30 March 2019) of US$13b has jumped 17% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which DIS is growing has accelerated. How has it been able to do this? Let's take a look at if it is only a result of industry tailwinds, or if Walt Disney has experienced some company-specific growth.

NYSE:DIS Income Statement, July 27th 2019

In terms of returns from investment, Walt Disney has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 6.5% is below the US Entertainment industry of 7.0%, indicating Walt Disney's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Walt Disney’s debt level, has declined over the past 3 years from 20% to 8.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 54% over the past 5 years.

What does this mean?

Though Walt Disney's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Walt Disney to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for DIS’s future growth? Take a look at our free research report of analyst consensus for DIS’s outlook.

  2. Financial Health: Are DIS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 March 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.