This week, Café de la Bourse put The Walt Disney Company under the microscope. We reviewed the group’s mission and ambitions, details of its operations and financial performance. We also looked at the technical configuration of Disney’s stock price to best prepare for a possible investment. Check out our Walt Disney name analysis.
The Walt Disney Company: a global entertainment giant
The mission and ambitions of The Walt Disney Company
From its humble beginnings as a cartoon studio in the 1920s to its pre-eminent name in the entertainment industry today, The Walt Disney Company has established itself as a staple that has left its mark through the stories of generations of families in and around the United States. world.
Today, The Walt Disney Company, together with its subsidiaries, is a leading diversified international media and family entertainment company. It includes Disney Parks, Experiences and Products, Disney Media & Entertainment Distribution and four groups – Studios, General Entertainment, Sports and International – that focus on content development and production.
The Walt Disney Company’s mission is to entertain, inform and inspire people around the world through powerful storytelling that reflects the iconic brands, creative minds and innovative technologies it owns.
What is the strategy of The Walt Disney Company?
The Walt Disney Company has an overall competitive advantage strategy that leverages the uniqueness of the products offered in the entertainment, media, and theme park industries.
In 2018, the company began a strategic reorganization based on this principle: the new structure combines the company’s direct services, technology and international media operations into one global business to take advantage of growth opportunities. In addition, the parks, resorts and consumer products have been combined to create a unique new location that combines the history and characters of Disney.
“We are strategically positioning our business for the future by creating a more efficient global structure to serve consumers around the world, increase growth and maximize shareholder value,” said Robert A. Iger, chairman and chief executive officer of The Walt Disney Company, during the reorganization. .
Under this new structure, the new Direct-to-Consumer and International segment will include Disney’s international media business and the company’s global direct-to-consumer business, including its Disney+ streaming service, the company’s stake in Hulu and its ESPN+ streaming service.
The new Parks, Experiences and Consumer Products segment will be the hub where Disney’s stories, characters and franchises come to life. Disney’s global consumer products business is merging with Walt Disney Parks and Resorts.
Strengths and Weaknesses of The Walt Disney Company
Presentation of the activities of The Walt Disney Company
The Walt Disney Company concentrates its activities in the field of media and entertainment, this is how its turnover is distributed among different activities
Operation of TV channels and radio stations (39.7% of sales)
The Walt Disney Company primarily owns the ABC television network (8 US-owned channels as of September 2020), ESPN Radio Network, Disney Channel, Freeform, FX and National Geographic. The group also produces and distributes television programs, produces video games and operates websites.
Film and video streaming production and distribution (23.7% of sales)
Production and distribution of movies and video streaming accounts for 23.7% of sales, particularly with its flagship product: Disney +. Disney+ is a video streaming service with programming from Disney, Pixar, Marvel, Star Wars and National Geographic. The lineup included approximately 33,000 episodes and 1,850 movies from the company’s created and acquired television and film library, as well as approximately 75 exclusive series and original movies of 2020. Disney+ launched in November 2019 in the United States and four other countries. in other countries of Western Europe in the spring of 2020.
Activities of animation studios and art production (13.5% of sales)
The studio produces films under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures brands. In fiscal year 2022, the Studios plans to release approximately 50 titles, including episodic films and television programs, for theatrical or DTC platforms.
Operation of recreation facilities (23.1% of sales)
Disney operates various resorts around the world: seven in the United States (Walt Disney World Resort, Disneyland Resort and Aulani, etc.), two in France (Disneyland Resort Paris), one in Japan (Tokyo Disneyland Resort), one in Hong Kong. (Hong Kong Disneyland) and one also in China (Shanghai Disneyland). The group also sells cruises (Disney Cruise Line), travel management (Disney Vacation Club and Adventures By Disney), design and development of parks and other real estate, and sales of consumer goods (children’s books, toys, game software, movies, etc.).
Distribution of sales worldwide
Net sales are distributed by geography as follows: United States and Canada (79.5%), Europe (11.2%) and Asia/Pacific (9.3%).
Fundamental analysis of the Walt Disney Company
Disney’s results for the first half of 2022
The Walt Disney Company reported a mixed second quarter of 2022 that admittedly beat analysts’ revenue estimates by a lot but fell short of earnings estimates. The entertainment giant reported a 23.3% year-over-year increase in total revenue, for 19.2 billion dollars and adjusted earnings per share (EPS) jumped 36.7% to $1.08.
A segment of Disney Media and Entertainment Distribution, which represents 71% its sales in the second quarter increased by 9.5% reach 13.6 billion dollars. The Disney Parks, Experiences and Merchandise category has grown 110% reach 6.7 billion dollarsthanks to a decrease in concerns related to COVID compared to the previous year.
The company’s operating profitability increased by 343 basis points reach 19.2%resulting in an operating profit of Rs 3.7 billion dollars. The net result is 1.57 billion dollars, up from 72% compared to the semester of the previous year.
At a time when one of its main competitors, Netflix, is facing increasing difficulties, The Walt Disney Company continues to make progress on the streaming front. Now with more than 205 million subscribers distributed between Disney+, ESPN+ and Hulu, the company is on track to become the new king of streaming. In the second quarter, the number of Disney+ subscribers increased by 32.9% reach 137.7 million and CEO Bob Chapek said the company is still on track to achieve that From 230 to 260 million followers by fiscal year 2024.
Right now, in the context of the overall bearish markets we’re experiencing, Disney shares are trading at 20 times expected 2023 earnings. The entertainment company’s valuation also looks very reasonable if EPS estimates materialize.
Technical analysis of Walt Disney Company
Graphical analysis of Walt Disney shares
Source: Café de la Bourse, graph built on IG, data for information only
Technical analysis of Disney shares
Over the past 12 months, Disney shares have been in a downward trend defined by a sloping channel (black on the chart) that has tested the bottom several times over the past few months. Disney’s stock price is falling 45%.
The medium-term trend for Disney stock is clearly bearish, with the 20-day moving average (green on the chart) below the 50-day moving average (black on the chart), itself below the 100-day moving average (red on the chart).
In the short-term, the trend for Disney stock is down with the MACD in negative territory on its signal line. The stochastic RSI is in the neutral zone, so the stock is neither overbought nor oversold.
Our opinion on the Disney promotion
As a long-term investor, short-term headwinds from inflation, interest rates and a possible recession have caused a big selloff in Disney stock and appear to be giving investors a starting point. interesting way out. Overall, the Disney Company’s second-quarter performance was strong, with its theme parks recovering and streaming services continuing to grow at a rapid pace. Despite its declining valuation, strong financials and unprecedented global brand recognition, it’s safe to assume The Walt Disney Company will be a good stock to hold going forward.
Disney Turbo Scholarship
To trade Disney shares, contact your stockbroker. For example, you can use a derivative product like a Turbo call or Turbo put to take advantage of the ups and downs in Disney stock.
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