Walt Disney Co Continues With Buy Recommendation

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Walt Disney (NYSE: DIS) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • DIS's revenue growth has slightly outpaced the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $3,413.00 million or 18.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.84%.
  • DISNEY (WALT) CO reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DISNEY (WALT) CO increased its bottom line by earning $3.12 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($3.38 versus $3.12).
  • The current debt-to-equity ratio, 0.34, 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 0.93 is somewhat weak and could be cause for future problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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 Walt Disney Company operates as an entertainment company worldwide. Its Media Networks segment engages in broadcast television network, television production and distribution, television stations, broadcast radio networks and stations, and publishing and digital operations. Walt Disney has a market cap of $109.6 billion and is part of the services sector and media industry. Shares are up 21.9% year to date as of the close of trading on Tuesday.

You can view the full Walt Disney Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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