Shares of Disney DIS jumped in morning trading Monday after news broke that Chinese regulators approved the entertainment powerhouse's $71.3 billion purchase of major 21st Century Fox FOXA entertainment assets. The approval inches the deal closer to completion and might have some investors asking themselves if now is the time to buy DIS stock?
Disney's proposed acquisition of key Fox assets received unconditional approval from China on Monday, according to a CNBC report . Shares of DIS popped roughly 1% on the back of the news, after opening lower. Meanwhile, shares of Fox jumped over 3%.
The Disney and Fox deal still needs to clear regulatory hurdles in serval other countries. Yet, Chinese approval, which occurred as trade tensions between the world's two largest economies remains high, is a good sign for Disney and Fox.
The U.S. Justice Department and both companies' shareholders have already approved the planned deal. EU regulators approved the deal earlier this month. This means some of the most significant clearances have already been passed.
Plus, Disney said on its quarterly earnings call that it is more optimistic that the deal will get done earlier than it originally anticipated, which could be as soon as early spring 2019.
Stock Price Movement
Moving on, we can see that Disney stock has outperformed its industry over the last five years. We will also notice that DIS has moved almost sideways over the last three years, down roughly 3% over this stretch.
DIS stock has, however, climbed roughly 12% in the past six months with investors buying as the Fox deal nears its conclusion and its streaming plans become clear. Disney stock hit $117.83 per share through late morning trading Monday, down roughly 2% from its 52-week high of $120.20 per share.
Disney's Q4 revenue climbed 12% to reach $14.307 billion, which topped our $13.81 billion Zacks Consensus Estimate. At the other end of the income statement, the media giant's adjusted quarterly earnings soared 38%.
The media conglomerate also officially announced the name of its new streaming service, Disney+, which is due out in late 2019. CEO Bob Iger said that Disney would show off the app and provide more details about its pricing strategy at an investor meeting tentatively scheduled for April.
Disney+ will carry a "rich array" of original Disney, Pixar, Marvel, Star Wars, and National Geographic content along with "unprecedented access" to Disney's library of film and television content. The initial list of new original shows includes two live-action Star Wars series, at least Marvel offering, a Pixar series, and more.
Disney's streaming push to take on Netflix NFLX and Amazon AMZN comes as others, such as Apple AAPL and A&T T , race to jump into the ever-growing streaming entertainment world. It is a crowded space, but Disney has the titles and brand-name content that could entice customers, especially at the right price.
On top of Disney+, the stand-alone streaming version of ESPN has performed very well so far, which helps to show that Disney will likely remain a dominant force in media.
Disney is currently a Zacks Rank #3 (Hold) based on its recent earnings estimate revision trends. The firm is projected to see its current fiscal year revenues climb 1.7% based on our current Zacks Consensus Estimate. Meanwhile, Disney's adjusted fiscal year earnings are expected to be flat.
With that said, investors could start to climb into DIS stock on the back of its Fox deal and streaming push. Therefore, it might not be a bad idea to pay attention to Disney stock to see if the stock continues to climb.
Plus, Disney is a dividend payer that is currently trading at 16.3X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its industry's 18.7X average and falls in line with the S&P 500. Over the last five years, DIS has traded as high as 22X, with a five-year median of 17.4X.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Walt Disney Company (DIS): Free Stock Analysis Report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report AT&T Inc. (T): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research