Why The Walt Disney Company (DIS)’s a Winner, But CBS Corporation (CBS) May Not Be: Time Warner Cable Inc (TWC)

Closing thoughts & stock fundamentals

Disney has compelling stock fundamentals. Despite being at its 52-week high, it is reasonably priced at 18.6 times past earnings versus an industry average of 19.5. In addition, it is generating a decent amount of return on invested capital at 10.9%. 17 out of 25 reporting analysts rate the stock a “buy” or better, and no analyst rates it a “sell.” Despite my criticism of CBS, it should be noted that it is generating an even higher return on invested capital at 11.5% for an even cheaper 18.2x multiple.

For a risky value play, I would consider also adding Time Warner Cable Inc (NYSE:TWC) into the mix. The firm only trades at 13 times past earnings but still has strong trends. EPS grew by a rate of more than 13% over the past 5 years, and it is expected to grow by a rate of over 11% over the next 5 years. If these estimates prove accurate, the multiple will either have to expand right away to generate significant annualized returns, or the stock will produce, on average, 10%+ annual returns. The consensus price target is at around a 15% premium to the prevailing price.

The article Why Disney’s a Winner, But This Stock May Not Be originally appeared on Fool.com and is written by David Gould.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.