Disney (NYSE: DIS) Could be Primed for Entry Soon

1020 2 1 1 1 1 (5)


Disney (NYSE:DIS) is a household name, famous the world over. More than likely we all knew about it at a very young age and had the mark of the mouse branded into our minds for eternity. What I'm saying is it's a strong brand, a really strong brand with a long history and some of the most recognizable characters and stories of the modern day.

Beyond the signature anthropomorphic animals, classic animations and Disneyland, a word nearly synonymous with theme park, is the media empire that Disney (NYSE:DIS) has built. Pixar, Lucasfilm, Marvel Studios, Miramax, ABC... all of these are part of Disney (NYSE:DIS) now in some way.  They are even trying to acquire most of 21st Century Fox's assets and won the right to bid in an anti-trust case with the U.S. Dept. of Justice that lasted a mere 6 months. What I'm trying to say, is Disney (NYSE:DIS) is an unstoppable powerhouse, a media juggernaut.

Despite this, DIS stock prices have suffered over the past few years. Probably in part due to all the expenditures and acquisitions and partly because of concerns with a declining media segment that makes up 50% of their profits. This is making traders wary in the short term and some just overlook Disney (NYSE:DIS) all together in favor of stocks that have shown stronger growth over recent months.

Just How Bad Is It?

Truthfully, in the short-term, things look uncertain as Disney's profits seemingly continue to decline (down 6% from the previous quarter). When we take a look at the bigger picture the long-term growth prospects become more obvious. Disney (NYSE:DIS) is expanding parks, building a film empire with some of the highest grossing films ever made and acquiring even more high profile properties. As the old saying goes, "you gotta spend money to make money" and Disney (NYSE:DIS) is familiar with this phrase.

Valuing a company like Disney (NYSE:DIS) can be a tricky prospect, with most companies you can simply look at their book value and get an accurate valuation based on their assets. Entertainment companies are different, their assets are a  simple part of the equation while the ideas and people behind the company are where the real value comes from in these situations.


Enterprise value, rather than book value, compared to market capitalization becomes a more useful metric in this situation.

Think about this how do you put a value on Mickey Mouse, Captain America, the individual talents of a Composer or an Animator? It isn't easy, is it? So, while a Spider-Man theme park ride may be factored into Disney's (NYSE:DIS) book value, Spider-Man, the character would not be. So in this situation, the book value appears far lower than the stock price, and that can be deceptive if you look at a company like Nintendo (TYO:7974) and you'll find similar results.

My Two Cents

In my opinion, Disney (NYSE:DIS) is currently undervalued on the market. This doesn't make it an immediate buy, unfortunately... Investor concerns over loss of profit and increased operational expenses coupled with pressure on the overall market could very well send Disney (NYSE:DIS) lower and to be honest, I hope it does as a sharp decrease in price would make an attractive entry point for those who have been waiting on the side. Between all of their property acquisitions and expansion into a more international market, Disney will undoubtedly be a strong performer in the long term. 

The lag in growth compared to the rest of the market indicates it being undervalued, bear in mind this doesn't mean deeper discounts aren't on the way. The latest Keynesian bubble is showing signs of weakness and the entire market could be in for a tumble in the second half of 2018. If this scenario does play out Disney (NYSE:DIS) will become one of the best buys once the carnage settles. Disney (NYSE:DIS) is a buy at 90 USD and a Strong Buy at 63 USD.

Join the Conversation on Telegram

Disclosure:

I have received no additional compensation other than the Ethereum that Hade Technologies pays to produce Exclusive content

Comments (5)

image
  • Scott
  • ,  Contributor
  • 05 July 2018, 08:07 am

This stock should easily be over $120/share

   0   Reply (0)   Follow(437)  

    image
    • DoubleD
    • ,  Contributor
    • 05 July 2018, 08:07 am

    I am actually surprised that DIS stock hasn\'t gone up more with hit after hit at box office.

       0   Reply (0)   Follow(437)  

      image
      • Jesse
      • ,  Contributor
      • 05 July 2018, 08:07 am

      Disney stock price has not done anything basically over the last 5 years.

         0   Reply (0)   Follow(437)  

        image
        • DoubleD
        • ,  Contributor
        • 05 July 2018, 08:07 am

        I doubt many people owning DIS will not vote for this deal

           0   Reply (0)   Follow(437)  

          image
          • John R
          • ,  Contributor
          • 05 July 2018, 08:07 am

          Just cast my vote for the Fox acquisition!

             0   Reply (0)   Follow(437)  

            Recent Updates

            •   
              Mar 6, 2019 11:15 PM

              DENTSPLY SIRONA Inc - Consumables Revenue

            •   
              Mar 6, 2019 11:15 PM

              DENTSPLY SIRONA Inc - Europe Revenue

            •   
              Mar 6, 2019 11:15 PM

              DENTSPLY SIRONA Inc - United States Revenue

            •   
              Mar 6, 2019 11:15 PM

              DENTSPLY SIRONA Inc - Rest of World Revenue

            •   
              Mar 6, 2019 11:15 PM

              DENTSPLY SIRONA Inc - Technologies and Equipment Total Net Sales ex. PM sales Revenue

            •   
              Mar 6, 2019 11:15 PM

              DENTSPLY SIRONA Inc - Technologies and Equipment Revenue