COMPANY DESCRIPTION

The Walt Disney Company (Walt Disney or 'the company') together with its subsidiaries is a diversified entertainment company. The company's large subscriber base and reach provide stability to the company's operations. However intense competition may divert consumers from the company's services, thus impacting its revenues and market share. 

 

ECONOMIC MOAT

Disney's economic moat is built from its media networks segment and its collection of Disney-branded businesses have demonstrated strong pricing power through the past few years. The ESPN network is the dominant player in U.S. sports entertainment. The media network component also includes the Disney Channel and ABC. While network viewership has declined over the past decade, it still outpaces cable ratings, and provides advertisers with one of the only remaining avenues for reaching a mass audience. Disney has mastered the process of monetizing its world-renowned characters and franchises across multiple platforms.

 

OUTLOOK

The Walt Disney Company got off to a strong start for fiscal 2015.  he company's Frozen franchise has been positive.  Recent investments in its Parks & Resorts ought to lead to increased attendance and guest spending.  Disney's recent dispute with Verizon over its unbundling of ESPN could weigh on results.  Disney should continue to monetize its content. These shares are already trading within our 2018-2020 Target Price Range, thereby limiting their long-term appreciation potential. Nevertheless, the company's strong financial power creates an appeal for conservative portfolios.

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STRENGTHS

  • Cable networks operations enjoys significant reach

  • Strong brand portfolio

  • Diversified entertainment businesses 

WEAKNESSES

  • Geographical concentration 

THREATS

  • Competitive pressure
    Increasing piracy could impact revenues

  • Changing consumer tastes and preferences 

OPPORTUNITIES

  • Positive outlook for gaming market

  • Expanding into the emerging markets 

     

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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