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Disney Rally Continues, Hits 52-Week High - Analyst Blog

By: Zacks.com
Posted: 6/2/2014 1:22:00 PM
Referenced Stocks: DIS;CL;BIG;HBI

The Walt Disney Company ( DIS ) is having a fabulous run on the index following the company's record quarterly performances. The company hit an all-time high of $84.39 before closing at $84.01 on May 30, 2014. Moreover, Disney's market cap has grown over 10% year to date, driving up investor interest in the stock.

Ever since the company posted better-than-expected second-quarter fiscal 2014 results (on May 5), estimates have been trending upward. For fiscal 2014, the Zacks Consensus Estimate moved up 2.5% to $4.16 and for fiscal 2015, it rose 0.6% to $4.63 over the last 30 days.

Continued double-digit revenue growth across Studio Entertainment, Consumer Products as well as Interactive businesses led to the impressive quarterly performance. A special mention for the incredible success of the animated movie Frozen that has surpassed $1 billion in revenues to become the highest grossing animated film of all time and has been instrumental in driving stellar results.

The company's adjusted earnings came in at $1.11 per share, outpacing the Zacks Consensus Estimate of $0.97 while surging 41% year over year. Revenues came in at $11,649 million, up 10% year over year. Moreover, it surpassed the Zacks Consensus Estimate of $11,216 million.

Moreover, the company is looking to deliver record quarterly performance in 2014 based on a number of factors, especially a strong pipeline of movies and ESPN's mega sport deals. Disney is likely to incorporate Frozen in its theme parks and introduce products associated with the movie to continue and cash on its popularity going ahead.

Disney expects the success of Captain America: The Winter Soldier to boost third quarter 2014 revenues and anticipates momentum in the segment to continue in the quarters ahead as its boasts a strong number of movies in the pipeline including Tommorowland, Guardians of Galaxy, Avengers: Age of Ultron. Notably, Star Wars Episode VII , Disney's most ambitious project in recent times, is slated for release on Dec 18, 2015.

Maleficent, released on May 30, collected a record $70 million at the box office in its opening weekend.

Moving to ESPN, the sports channel has bagged the rights for NBA playoffs and the FIFA tournament, two very important events in the sports calendar. This is likely to drive advertising revenue to record highs and in turn the company's earnings.

Currently, Disney carries a Zacks Rank #2 (Buy).

Apart from Disney, other stocks like Big Lots' Inc. ( BIG ), Colgate-Palmolive Co. ( CL ) and Hanesbrands Inc. ( HBI ) achieved new 52-week highs of $43.20, $68.47 and $85.06 respectively, on May 30, 2014.


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