Is Disney Stock a Good Long-Term Investment? The Motley Fool

Which outpaced the drop of many other non-tech stocks which fell about half the amount during that time. Disney stock has been a part of six stock splits since the IPO,The first post IPO stock split happened in 1967 which was a 2 for 1 stock split. There were two more 2 for 1 stock splits shortly after in 1977 and 1973. The next stock split happened over a decade later in March 1986 when a 4 for 1 stock split took place. The 90s brought two more stock splits, one 4 for 1 in 1992 and then a 3 for 1 stock split in the summer of 1998. All these stock splits work out as 1 share purchased at IPO being the worth 384 shares today.

Basic pay-TV service rates have continued to increase, which could cause consumers to cancel their subscriptions or reduce their level of service. ESPN garners the highest affiliate fees of any basic cable channel, and a decrease in pay TV penetration would slow revenue growth. The cost of sports rights may continue to skyrocket, putting pressure on margins. 23 Wall Street analysts have issued “buy,” “hold,” and “sell” ratings for Walt Disney in the last year.

  1. Basic pay-TV service rates have continued to increase, which could cause consumers to cancel their subscriptions or reduce their level of service.
  2. However, buying a $120 billion company for one comic book character doesn’t make sense.
  3. In a similar way, Disney’s theme park model seems to be stuck in the past.
  4. He is known for such successes as the launch of the animated film Frozen and the acquisition of Marvel.
  5. The technology has been crucial in the development of Disney’s own streaming services, including Disney+.

This is even after longtime Chief Executive Officer Bob Iger returned and launched a plan to boost growth. 2009 was a tough year for Disney and the market as a whole. Walt Disney Co. reported Q1 profit that fell substantially short of analysts’ expectations which sent the stock price to a 10% decline recession proof stocks in after-hours trading. Putting Disney’s stock price in the $15 territory, a long way from a previous all time stock price high around $43. As we saw with many stocks during the pandemic, circumstances outside of Disney’s control can wreck its business and cause its stock price to plummet.

Walt Disney Company Company Profile

Each new franchise deepens the Disney library, which should continue to generate value over the years. We expect fiscal 2023 admissions revenue will remain ahead of fiscal 2019, despite consumer worries about the economy and inflation. The company is based in Walt Disney Studios, Burbank, California, and is best known for its work in animation and for creating the character Mickey Mouse. Over the years, the company expanded into live-action movies, theme parks, and even new corporate divisions such as Pixar, Marvel, and Lucasfilm. The new divisions provided new avenues for growth that helped accelerate the company’s business to a record high revenue near $85 billion in F2022. Disney’s biggest acquisition to date is its 2018 deal to acquire Fox’s entertainment assets for $52.4 billion, or $71.3 billion, including the assumption of debt.

But if you look beyond the company’s short-term headaches and focus on the long term, the situation starts to appear quite different. After all, there’s a reason why Disney has lasted 100 years. Its p/e ratio is elevated at 27.04% and it does not offer a dividend, according to Macrotrends. The company beat earnings-per-share estimates in four of the past six quarters.

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The status allows Disney to provide typical municipal services like water and sewers, roads, and fire protection. Reedy Creek covers 40 squares miles, maintains 134 miles of roads and handles 60,000 tons of waste annually. Republican legislators who passed a bill repealing the district effective June 1, 2023 said details of the change would be worked out and legislated over the next year.

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They ride fewer attractions and buy less in the restaurants and shops than typical vacation guests because they live locally. In short, they take up capacity that might otherwise be used by bigger-spending out-of-state visitors so Disney put a cap on them by ceasing the sale of annual passes. Its early movies innovated by grounding their characters in the real world. They dispensed with typical superhero tropes like secret identities and gaudy costumes. Further challenging conventions, Marvel hired a heavyweight cast including Scarlett Johansson and Robert Downey Jr. The studio didn’t even cut corners on voice work with Britain’s Paul Bettany playing an artificial intelligence program.

But Disney is capable of successfully navigating these industry transformations thanks to its copious collection of beloved characters and brands making up Disney’s intellectual properties. From Mickey Mouse to Marvel Comics, Disney’s icons are known the world over. That’s why Iger noted the company’s businesses that “will drive the greatest growth and value creation over the next 5 years … are inextricably linked to our brands and franchises.” The entertainment giant’s share-price decline makes sense. Disney faces an extraordinary number of challenges in 2023. In 1967, Florida legislators created a special taxing district called the Reedy Creek Improvement District, for the site of the Disney World amusement park.

Parks include the flagship Walt Disney World in Florida, Disneyland Paris, and Hong Kong Disneyland Resort. Guests can also enjoy themed vacations under the National Geographic banner and others. This segment also provides a wide range of licensed and branded themed products based on each of its many franchises. Meanwhile, Disney’s strongest business — parks, experiences, and products — continued to shine. That unit reported double-digit growth in both revenue and operating income year over year.

Disney has also changed its ticket options and services recently. Notably, it has introduced Genie and Genie+ services, which are available via a mobile app. Disney Genie is a complimentary service which provides personalized itineraries and planning for a Disney resort visit. Disney Genie+ is the advanced version, available for $15 per ticket per day, which also allows users to use the Lightning Lane (previously known as the FastPass program) for faster access to several attractions per day.

The Mouse used the opportunity to refurbish attractions which were difficult to take out of service when the gates were open. It also carried out a root and branch analysis of how to extract even more money out of visitors and started to implement the changes when the gates swung open again. It looks like Marvel didn’t see the writing on the wall because as the world began to come out of lockdown, it was commissioning a glut of costly streaming shows, and it is now literally paying the price. Its bloated pipeline puts more pressure on visual effects teams and increases the chance that the end result may not be up to scratch. Testimony to this, Secret Invasion debuted to the second-lowest audience of any Marvel streaming series with just 994,000 viewers tuning in over its first five days according to media analysts Samba TV.

With many of its restructuring moves set for completion by January, next year could offer significant growth. They were introduced to the world by Josh D’Amaro, chairman of Disney Parks, Experiences and Products. Famous for his sparkling toothy grin, D’Amaro is a regular visitor to the parks and is often stopped for selfies with guests and staff, who are known as Cast Members due to the role they play in a themed environment. D’Amaro himself has 151,000 followers on Instagram, where he posts pictures of himself inside the parks alongside Cast Members, riding roller coasters, brandishing lightsabers and eating soft-serve. Benefits were even cut from the most expensive annual passes which cost $1,399 and previously included free downloads of photos taken by Disney photographers during meet-and-greets and rides. In 2021, Disney started charging extra for the downloads and even stopped selling annual passes for a period of time.

Key Morningstar Metrics for The Walt Disney Company

If you want to buy a piece of the magic kingdom, here’s what you need to know. Those all cater to the same customers, creating a unique brand affinity. However, the company is much more than just its namesake brand. Today, Disney is a massive entertainment conglomerate, spanning movies, TV, theme parks, cruises, vacations, toys and other consumer products, and sports. Disney just posted unusually weak sales and earnings trends to close out its fiscal 2022. Yes, revenue soared in the parks and resorts division, which handled higher volumes, increased ticket prices, and robust demand for food and merchandise.

A great long-term franchise, but they’ve loaded the balance sheet with debt and cut the dividend three years ago. Their ESPN is starting to struggle, and Disney+ isn’t making them money. As recently as the first quarter of this year, attendance at Disney World during peak holiday weeks was still capped at nearly 20% below pre-pandemic levels, which the company said improves the guest experience. This non-film part of Disney’s business, called its Disney Parks, Experiences and Products segment, enjoyed strong revenue growth in 2023.

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