DIS - Embedded Expectations Analysis - 2020 08 17
The Walt Disney Company (DIS:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 50.7x Uniform P/E. At these levels, the market has expectations for profitability to remain stable. Although management's concerns about subscribers, theme park headwinds, and their content suggest the potential for near-term headwinds, market expectations are too bearish, and equity outperformance is likelySpecifically, management may have concerns about the timeline of consumer confidence recovery, and may lack confidence in their ability to sustain Disney+ and ESPN+ subscriber growth. Furthermore, they may be concerned about the potential of their live action films, and the potential of Mulan in particular. Moreover, they may be exaggerating the progress of their direct-to-consumer business plans, the potential of new Disney+ content, and their television and film production restarts. Additionally, they may have concerns about the potential of upcoming Marvel movies and live actions, and the content of their Star platform. Also, they may lack confidence in their ability to mirror their Disney+ strategy for their new Star-branded streaming service, and may be concerned about the costs of their blockbuster theatrical movies
Although management's concerns about near-term issues suggest the potential for near-term headwinds, market expectations remain far too bearish given its diverse growth drivers post-Fox acquisition and longer-term equity outperformance is likely warranted for DIS
Walt Disney is an entertainment company. The company's segments are: Media Networks, which includes domestic cable networks, broadcast television network and domestic television stations, and television production and distribution; Parks, Experiences and Products, which includes theme parks and resorts, and consumer products operations; Studio Entertainment, which includes motion picture production and distribution, music production and distribution, and post-production services; and Direct-to-Consumer and International, which includes international television networks and channels, direct-to-consumer streaming services, and other digital content distribution platforms and services.
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