Disney (DIS) Stock Up Despite Barclays Caution
NEW YORK (TheStreet) -- Shares of The Walt Disney Co. (DIS) - Get Report are advancing 1.30% to $99.69 Friday afternoon despite Barclays's (BCS) contention that "any failure at the box office could have a disproportionate impact" on the stock.
Disney's studio top-line compound annual growth rate was 4% between 2010 and 2015, while operating income rose 24%. This indicates that margin expansion has driven growth more than top-line performance has, the firm noted, Barron's reports.
Disney's operating leverage in its studio segment is due to better execution at its studios as well as the contribution of singular franchises, according to Barclays.
"While the quality of Disney's execution has justifiably resulted in estimates on studio margins being raised into future years, multiples on Disney studios have also implicitly gone up given the equity outperformance over the last couple of years," the firm wrote in a note. "Therefore, while success is likely priced in, any failure at the box office could have a disproportionate impact on the stock."
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of A-.
Disney's strengths such as its revenue growth, growth in earnings per share, notable return on equity, expanding profit margins and good cash flow from operations outweigh the fact that the company has had lackluster performance in the stock itself.
You can view the full analysis from the report here: DIS
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
