HSN, Inc. (HSNI), The Coca-Cola Company (KO): This Retailer Is Looking Good Beyond TV

Acting with Disney

The “entertainment integration strategy” that HSN has adopted in recent years provides another catalyst for the company. This thrust enables customer interaction beyond TV-based shopping. It was at work early this year with Oz The Great and Powerful, a production of The Walt Disney Company (NYSE:DIS).

HSN and The Walt Disney Company (NYSE:DIS) had a marketing collaboration on the creation of an exclusive collection of home and beauty accessories, fashions, and jewelry based on this movie. The retailer not only conducted a comprehensive marketing campaign across its platforms but also held live events to promote the collection and the film.

A sequel to this collaboration can be expected, as the movie raked in $281.1 million worldwide in its first two weeks of screening; this has been one of the bright spots in The Walt Disney Company (NYSE:DIS)’s performance so far this year. The company’s studio entertainment revenue for the fiscal second quarter rose year-over-year to $1.34 billion, up from $1.18 billion, and generated operating income of $118 million compared to an $84 million loss a year earlier. Total Disney revenue for the comparative period rose to $10.55 billion from $9.63 billion, while operating income hit $2.51 billion, up from $1.95 million.

Foolish take: buy on dips

HSN had robust results in its most recent quarter as well, with its net sales up 5% to $772.7 million and its operating income of $52.5 million rising 2% for the period. Its diluted earnings per share of $0.56 was 24% above the year-earlier level and was ahead of the $0.52 analysts’ consensus estimate. For the current fiscal year, analysts expect $3.06 earnings per share for the company

HSN, Inc. (NASDAQ:HSNI)’s premium valuation of a trailing 12-month price-to-earnings ratio in the mid-20s appears justified given its strong fundamentals. Its 26.75% return on equity and annual dividend yield of 1.2% are buying incentives as well. As a final thought, buying on dips from its current level hovering around the $60’s might be prudent as this equity has just set a new 52-week high of $61.53.

The article This Retailer Is Looking Good Beyond TV originally appeared on Fool.com and is written by Arturo Cuevas.

Arturo Cuevas has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Walt Disney. The Motley Fool owns shares of Walt Disney. Arturo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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