NEW YORK (TheStreet) -- The Walt Disney Co. (DIS) - Get Report shares are higher by 1.27% to $111.24 on Thursday after the company-owned ESPN said it would eliminate about 4% of its workforce or about 300 employees, the Wall Street Journal reports.
This action comes as the sports network is looking to cut costs and restructure its technology workforce for digital growth.
Employees received a memo from ESPN President John Skipper who stated that the company plans to be "as supportive as we can during this transition."
Departments that will be affected by these layoffs include distribution, advertising, technology, administration and content.
Overall, consumers are avoiding costs by dropping their pay-TV packages and looking towards skinnier bundles, the Journal stated.
Separately, TheStreet Ratings team rates DISNEY (WALT) CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate DISNEY (WALT) CO (DIS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DISNEY (WALT) CO has improved earnings per share by 13.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DISNEY (WALT) CO increased its bottom line by earning $4.25 versus $3.38 in the prior year. This year, the market expects an improvement in earnings ($5.09 versus $4.25).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Media industry average. The net income increased by 10.6% when compared to the same quarter one year prior, going from $2,245.00 million to $2,483.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.6%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, DISNEY (WALT) CO's return on equity exceeds that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: DIS