Analysis of the Walt Disney Company
Report by Valanium Analysts: Juan Calderon, Sergio Delgado, Andre Oliveira, and Juan Paiz Investment Recommendation: MARKET PERFORM
DIS – NYSE (12/3/01)
52 week range
$15.50 - $34.80
Revenue (2001 Unaudited)
Book Value per Share
(09/01 un audited)
Dividend Yield (2000)
Avg Daily Trading Volume
Average of Competitors
Actual Current Price
Return of Equity
Return on Assets
Est. 5 Years EPS
Growth Rate (2002-2006)
Entertainment – Media Conglomerate
EBO (Abnormal Earnings) Valuation $ 5.86
Performance of DIS
Return on Disney
Return on S&P 500
Return on Competitors
12 mo 24 mo
-13% - 09%
Slow economy, lower advertising expense and decrease in tourism given September 11 attacks are affecting the company performance and will continue to do it trough 2002. Competitors have stronger ratings and thus are better positioned to defend their market share on advertising
Our DCF valuation of 17.87 implies an overvaluation of the company. The P/E valuation implies it is slightly undervalued. We believe the company is fairly valued unless the economy and Disney results deteriorate.
The company has showed strength in its cable operations, if investments in ABC produce better programming for next year we could see an upside for the stock at the end of 2002, beginning of 2003 Content creation as well as the big digital library the company owns provide the company with future options that can result in revenue streams
BUY: A strong purchase recommendation with above average long-term growth potential. MARKET OUTPERFORM: A purchase recommendation that is expected to marginally outperform the return of the market. MARKET PERFORMER: A recommendation to maintain current positions with returns to match that of the market. SELL: A recommendation to sell the security (or short the security) as it is expected to decrease in price in the medium term.
The Walt Disney company is one of the largest media and entertainment conglomerates (#2 behind AOL Time Warner), with operations covering four key businesses: Media Networks, Studio Entertainment, Parks and Resorts, Consumer Products.
Media Networks: it has two categories, Broadcasting and Cable Networks. Broadcasting units includes the ABC Television Network (#3 behind NBC and CBS). Cable Networks includes the ESPN-branded cable networks, Disney Channel, Disney Channel International, stakes in E! Entertainment and Lifetime and the start-up cable operations, such as Toon Disney and SoapNet.
Studio Entertainment: The Studio Entertainment segment produces a wide variety of movies, television animation programs, musical recordings and live stage plays. It also engages in the theatrical, home video and television distribution of Disney’s film and television library. It includes banners such as Walt Disney Pictures, Touchstone, Buena Vista, and Miramax.
Parks and Resorts: They are the most popular in the world, including the Walt Disney World resort in Florida (#1 park in US, 15.4 million visitors per year), the Disneyland Park and two hotels in California, and the Disney Cruise line operated out of Port Canaveral, Florida. The segment also generates royalties and/or management fees on revenues from Tokyo Disneyland (16.5 million people per year) and Disneyland Paris.
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