DIS - Embedded Expectations Analysis - 2021 02 25
The Walt Disney Company (DIS:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 56.7x Uniform P/E, implying bullish expectations for the firm. Although management's concerns about international advertisement growth, their original content pipeline, and park demand suggest the potential for near-term headwinds, market expectations are still too pessimistic, and long-term equity outperformance is likelySpecifically, management may lack confidence in their ability to sustain international advertising revenue growth as well as subscriber and operating income growth across their streaming services. In addition, they may have concerns about the release of Black Widow in theatres, the launch of Pixar's Soul, and the sustainability of ABC national drama and local news viewership. Moreover, management may be exaggerating the potential of their original content pipeline, ESPN's MegaCast and sports rights deals, and their new park attractions. Furthermore, they may lack confidence in their ability to regain lost parks and resorts segment revenue, realize pent-up park demand, and manage park costs
Although management's concerns about international advertisement growth, their original content pipeline, and park demand suggest the potential for near-term headwinds, market expectations are still too pessimistic given the firm's diverse growth drivers post-Fox acquisition. As such, longer-term equity outperformance is likely warranted
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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