The Walt Disney Company (DIS): Will Your Dreams Come True?

Page 1 of 2

The Walt Disney Company (NYSE:DISclaims to be a place “Where dreams come true,” but how do they compare to their competitors as an investment? In an age where technology and piracy are making the media environment more challenging, some may expect Disney and its competitors to be risky investments.

The Walt Disney Company (NYSE:DIS)

Competition

Piracy may have stolen some of the icing, but the cupcake is still there. There are other companies competing against Disney as well, with News Corp (NASDAQ:NWS) and Time Warner Inc. (NYSE:TWX) being two of them. These companies all differ in size, all bringing a bit of diversity with them. The Walt Disney Company (NYSE:DIS), News Corp, and Time Warner have market caps of $117.2 billion, $73.4 billion, and $54.2 billion. This industry is also being challenged by online streaming services like Netflix, Inc. (NASDAQ:NFLX). There is plenty of competition, so what makes Disney more of a dream than a nightmare?

Partnerships

All of these companies have teamed up with some other solid companies. News Corp is partnered with Fox News, which continues to gain market share on its largest competitor, CNN. This is probably the largest partnership of News Corp (NASDAQ:NWS), despite its filmed entertainment, 27 local TV stations, cable network programming, etc. Time Warner Inc. (NYSE:TWX) has an impressive repertoire including HBO, CNN, TNT and the CW. Its partnership with New Line Cinema forms the largest filmmaker in the world. It also has a publishing branch of the company that includes companies such as People, Time, and Sports Illustrated. News Corp and Time Warner generate about 50% and 30% of respective sales from overseas.

The Walt Disney Company (NYSE:DIS) has not faltered with its partnerships either. It owns a 42.5% stake in A&E, the History Channel, and Lifetime Networks. Although it may not be a surprise that Disney also owns the Disney Channel, that is not where its ownership stops. The company also owns ABC and ESPN. About 75% of Disney’s sales come from within the U.S.

ESPN generates about 75% of cable network sales, and have dominated the sports sector for recent years. ESPN’s business model is impressive. In fact, about 65% of its sales are generated through affiliate fees. What competition does ESPN have? Because of its lengthy and expensive contracts with various sports leagues, there doesn’t seem to be any reason why they shouldn’t continue to dominate this industry for the foreseeable future.

Valuation

What kind of expense should investors expect to potentially fulfill their dreams? News Corp (NASDAQ:NWS) and Time Warner Inc. (NYSE:TWX) show free cash flow yields of 4.0% and 5.8% while The Walt Disney Company (NYSE:DIS)’s is 4.2%. Disney has the highest P/E of the three companies at 19.4, followed by Time Warner and News Corp at 17.6 and 12.6 respectively. Disney doesn’t seem to offer the best value, but let’s continue to look. Disney, Time Warner, and News Corp offer an earnings yield of 5.1%, 5.6%, and 8% respectively. All of these companies release dividends to its shareholders. Disney and Time Warner Inc. (NYSE:TWX) beat the industry average of 1.1% by .1% and .8% respectively. News Corp (NASDAQ:NWS) is well below the industry average with a dividend yield of just .5%.

Ok, so it becomes clear that The Walt Disney Company (NYSE:DIS) may not be the cheapest business to buy into, but how does it perform in comparison to Time Warner, the best company offering the best value, and News Corp, probably the most expensive of the three?

Performance

When looking at these three companies in comparison to the S&P 500, they have all done well. The difference is how they have done in comparison to each other. I compared on several different time frames including five years, one year, six months, three months, one month, and YTD. In the past one year, Time Warner Inc. (NYSE:TWX) and News Corp (NASDAQ:NWS) have outperformed Disney. In the last one month, the S&P 500 has outperformed all three of these companies. As for the other results? Well, all three companies have performed better than the S&P 500 with Disney holding the lead every time. The chart below shows just how dominant The Walt Disney Company (NYSE:DIS) has been over the past ten years.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!