Analysis Of The Walt Disney Company In Terms Of Investment
The Walt Disney Company is a conglomerate entertainment company that owns many subsidiaries in different segments. Disney owns Media Network segments brands such as ESPN, Disney, Freeform and ABC TV Network. Disney is also tapped in the radio business which made up of the Radio Disney Network and ESPN Radio network. Their Park and Resorts segment owns various theme parks in different locations such as, the Walt Disney World Resort (Florida), The Disney Resort (California), Disneyland Paris, Hong Kong Disneyland, Tokyo Disney Resort, and Shanghai Disney Resort. This segment also owns Resorts in Hawaii and a Cruise Line. Disney also has a Studio Entertainment segment. This segment produces live-actions and animated movies under the Pixar, Marvel, Lucasfilm, and Walt Disney Pictures brands. The Walt Disney company was founded in 1923 and their headquarters are in Burbank, CA.
Reason for Stock Selections
Disney owns many companies in different segments. Although the stock has been sluggish the last few years, growth is expected in segments such as theme parks and resorts and video streaming. Experts believe this is the best time to buy Disney stock due to its future in video streaming. Kevin Jacques, a finance professor at the Baldwin Wallace University in Ohio believe “Disney’s media network now appears to be stabilizing, and given recent acquisitions, the key now is Disney’s direct to consumer streaming service, which is due to be up and running by 2019”.
Once Disney’s streaming service (Disney Play) launches in 2019, it will need to compete with many other streaming services such as Netflix, Amazon and Hulu. The question is, will Disney be able to distinguish their streaming service and attract subscribers at a reasonable price like their competitors? Disney’s large catalog of movies and shows will display on Disney Play. Although Netflix currently has a deal with Disney to stream Marvel and Star Wars movies, the rights will expire in 2020. After that deal expires, Disney Play will be the only streaming service with the rights to stream movies from those franchises. Disney will also produce original content. In Disney Play’s first year, they plan to produce five movies and five original shows. If Disney is successful with their streaming service, the stock will have “significant upside potential”.
There has been substantial growth in Disney’s theme parks and resorts. The company has invested $15 billion to expand their amusement parks across the world. Their focus is to bring to life franchises such as Toy Story, Marvel, and Star Wars for their guests. On June 30th, Toy Story Land officially opened at Disney World. This expansion has been one of the largest at Disney and was a huge success. It brought in more foot traffic for the theme park. The next big expansion is Star Wars land for both Disneyland Resort and Walt Disney World that is scheduled to open in 2019. This expansion is expected to draw in large crowds.
Investment Objectives
Investment objectives help investors meet their financial goals. Objectives such as growth and income are considered when investors want their investments to grow over time but also provide some income. The Disney stock can be considered a growth and income stock. The company has been in business for 95 years and continues to have growth opportunities. Disney pays out dividends and has a dividend yield of 1. 45%. In the last three years, dividends have increased from $0. 71 to $0. 84 per share.
