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The Walt Disney Company (DIS): Why You Should Stick With It No Matter What

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You’ve brainstormed vacation spots, assessed financial data, and completed your homework. Now you’re asking yourself, “Where do I go from here?”

DisneyFirst, consult your notes. Part 1 reviewed liquidity, financial leverage, and asset management ratios. Then, Part 2 analyzed profitability and market value ratios.

A “No Brainer”

As you recall, The Walt Disney Company (NYSE:DIS) utilizes its assets well, especially considering its large amount of property, plant, and equipment. Additionally, it is poised for revenue increases from the coming Star War series as well as from Hong Kong Disneyland.

The Walt Disney Company (NYSE:DIS)’s Shanghai theme park should also be a home run—so, think long term. Even with an initial investment of $4 billion, and projected EBITDA of nearly $400 million, the firm is further positioning itself as a market leader.

Even better, though, is that The Walt Disney Company (NYSE:DIS)’s other business segments are growing and generating profits. Acquiring (nearly pilfering) Marvel Entertainment in 2009 for about $4 billion seems to be paying off nicely. For example, The Avengers grossed over $1.5 billion in the box office. Now, analysts anticipate that Iron Man 3 could come near, or even exceed, that mark. Plus, consider the future revenue streams from merchandise! Clearly, The Walt Disney Company (NYSE:DIS) made a phenomenal forward looking acquisition. It will continue to reap the benefits.

Competitive Landscape

Viacom, Inc. (NASDAQ:VIAB) will also gain from Marvel’s productions. Its subsidiary, Paramount, is still receiving money on an 8% proceed agreement with Marvel in exchange for distributing Marvel films. Additionally, Paramount will earn 9% of the proceeds from Iron Man 3.

Connecting this information with Viacom, Inc. (NASDAQ:VIAB)’s ratios and its quarterly dividend payments seem to make it a favorable investment. However, I anticipate the stock will fluctuate around its existing support level of $64. To move forward, management must address the 18% net loss for last quarter, the unfavorable decreases in its programs being distributed, and the aggressive expansion from competitors. Be on the lookout for the company news releases.

Like The Walt Disney Company (NYSE:DIS), Time Warner Inc (NYSE:TWX) is a consistent dividend stock poised for growth. It recently posted 24% first quarter profit. Its long term profit potential is even better, though. With the spinoff of its Time, Inc. magazine division—with an average enterprise value of $3.9 billion—Time Warner Inc (NYSE:TWX) is shedding a heavy asset and production based component of its business. Additionally, by divesting Time Inc., the managers will be able to better focus, the structure will be leaner, and stockholders will likely receive the created value.

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