DIS - Embedded Expectations Analysis - 2021 06 07
The Walt Disney Company (DIS:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 47.9x Uniform P/E, implying bullish expectations for the firm. Although management's concerns about sports broadcasting, new content launches, and subscriber growth 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 maintain operating income and subscription growth across their streaming services and continue producing buzzworthy content for Hulu. Moreover, they may be concerned about the potential of their 7-year NHL broadcasting rights deal, their recently added Marvel content, and upcoming titles on Disney+ and Disney+ Premier Access. Management may also lack confidence in their ability to mitigate domestic advertising revenue declines for ESPN and capitalize on sports gambling opportunities. Furthermore, they may have concerns about the impact of pricing on their subscriber growth and the potential of their Hulu Live digital multichannel video programming distributor (MVPD) service
Although management's concerns about sports broadcasting, new content releases, and subscriber growth 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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