Besides its amusement parks and iconic animated characters like Mickey Mouse, Snow White and Cinderella, Disney is a conglomerate stuffed with highly-recognizable brand names like Pixar, Marvel, Lucasfilm, ABC, ESPN and, more recently, the digital streaming site Hulu.
Disney stock has slid, demand-wise in the past few years, but its conservatively-run business model and steady earnings make it a favorite of value investors who know a stable company when they see one. That said, the modest dividend (just $1.67 in 2018, although it is set to rise slightly to $1.82 this year) and the glacial pace of stock growth is holding Disney back.
What's the future hold for DIS going forward? Experts say that, in actuality, Disney shares represent a good value these days, but are by no means a Marvel-like blockbuster.
DIS Stock at a Glance
Disney is trading about $127 per share at this writing, with a 52-week trading range of $100 to $147.15.
Over the past two years, DIS is up 27%, outpeforming the 13% rise by the S&P 500. On a year-to-date basis, Disney stock is up 16%.
"Disney isn't doing anything wrong -- they're just plowing all their capital into acquisitions and creating new content," says Wheeler Winston Dixon, coordinator of the film studies program at the University of Nebraska, and a long-term follower of Disney stock.
"When you consider what Disney owns -- Lucasfilm, ABC, A&E, ESPN, Marvel, Disneyland and related properties, Lifetime, ABC Studios and a whole lot more -- buying Disney right now is like buying a reliable blue chip," Dixon says.
Pros to Buying DIS Stock
A big question going forward on Disney is this -- with all of the hits and quality family programming it has in its vault now following recent acquisitions, can Disney find a way to differentiate its streaming service from competitors like Netflix ( NFLX)? And, can it do so with a reasonable price to attract subscribers? Disney has announced that its Disney+ service will cost $7 a month or $70 per year.
"If they are successful on that front, then DIS has significant upside potential," says Kevin Jacques, a professor of finance at Baldwin Wallace University in Ohio.
On a ground-level basis, business owners with direct ties to Disney like what they see.
"My outlook on Disney over the next three to six months is positive from a theme parks standpoint, although I don't anticipate a large jump," says Dean Gibbons, owner of Park Savers, which sells Disney theme park tickets and packages for clients, and is a long-term DIS investor.
Attendance is up at all their theme parks including Disneyland and Walt Disney World, Gibbons says. "They recently opened Toy Story Land, which has been a huge hit with park goers and attendance only increases in the fall with Halloween and the holidays," he says.
Major expansions are expected to continue to drive attendance up, and revenue with it. Its Star Wars: Galaxy's Edge areas at its U.S. parks opened in 2019 after three years construction, "which is going to bring in a new crowd they've never had before," Gibbons says. "This will have a decent impact on the company as a whole."
Cons to Buying DIS Stock
Some stock market experts say it may be best to wait for Disney stock to slide lower before pouncing.
While studio entertainment seems robust from a talent and brand name standpoint, it represents only 17% of revenues. "The actual largest business segment, at 43% of revenues, is media networks, which includes ABC and cable networks ESPN, The Disney Channel and ABC Family," says Tom Weary, chief investment officer at Lau Associates in Greenville, Delaware. "Concerns about cable-cutting have been weighing on the stock, while also increasing the urgency of rolling out a streaming strategy."
In addition, Disney has long been the master of developing and monetizing popular characters -- think Mickey Mouse and Disney princesses -- and acquisitions in recent years have vastly expanded their stable of characters to develop, including Pixar, LucasFilm and Marvel.
"Disney recently won a bidding war against Comcast ( CMCSA) for the entertainment assets of Twenty-First Century Fox ( FOXA), which will add to the list of characters, but at $71.3 billion comes with some risk," Weary says. "The acquisition also brings Disney another 30% stake in Hulu, which will aid in their developing direct-to-consumer streaming strategy, driven by the need to compete with Netflix and Amazon ( AMZN) Video."
The Bottom Line on DIS Stock
Any analysis of DIS stock needs to address the future of its longtime and successful CEO.
"CEO Bob Iger will eventually retire, so there is some risk in a successful transition to his eventual successor," Weary says. "However, DIS is highly-profitable company paying a 1.3% dividend with a long history of success and culture of innovation.
"Any temporary setbacks probably represent good opportunities to add to a high-quality, long-term core holding," Wearing says.
Some market-watchers are even more enthusiastic over DIS fortunes going forward. Scott Kubie, chief investment advisor at Carson Wealth, a money management firm in Omaha, Nebraska, says Disney has all the ingredients to outperform over coming years.
"Short-term predictions are always imperfect, but the moderating subscriber losses reported in its last quarter coupled with Fox and anticipation of upcoming direct to consumer offerings should be positive catalysts moving forward," he says.
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