Disney Is Saving Money While Saving Mr. Banks

NEW YORK (TheStreet) -- Walt Disney's (DIS) animated feature Frozen was again the number #1 box-office attraction for the week ending Sunday.

Frozen has heated up the bitter winter cold for many movie-goers. Last weekend Frozen pulled in another $20.7 million, which cumulatively takes the Disney feature to almost $298 million in ticket sales so far. Its global gross total in ticket sales stood at $640 million. That makes it the second best money-maker among Disney animated features just behind The Lion King.

Disney must be  laughing all the way to the bank.

Another Disney feature hasn't done as well as Frozen but it warmed my heart: Saving Mr. Banks with Tom Hanks as Walt Disney and Emma Thompson as P.L. Travers, author of Mary Poppins, a book that will soon celebrate its 50th anniversary.

It will be interesting to see how Disney leverages that anniversary into more revenue for the company and its shareholders.

Saving Mr. Banks earned $9 million last week weekend, bringing the feature, which cost Disney about $35 million to make, a total box office take so far of $59 million in the U.S. and $66 million worldwide. Thus, Disney has recouped the cost of making the picture plus grossed an additional $31 million.

The Disney movie machine isn't the only reason the company makes money and saves it in the form of levered free cash flow. Its other operations have been very profitable and the company is striving to live up to its goal to "maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value."

As the chart below animates distinctively, shareholders have enjoyed a nice upwardly profitable year for the stock price.

DIS Chart
data by YCharts

Its trailing 12-month (TTM) free cash flow yield (the orange line) has increased to 4.91%. As of Sept. 28,  the company had levered free cash flow (TTM) of $6.76 billion and operating cash flow of nearly $9.45 billion. Its year-over year quarterly revenue growth as of that point in time (the red line above) had increased by about 6.41%.

By saving money and making lots of money at the same time the company was able to announce on last month an annual cash dividend of 86 cents per share, up 15% from the previous year. The December payment is the 58th consecutive dividend payment to shareholders.

But at the Thursday close stock price of $74.80, this dividend payout represents a paltry yield of only 1.15%.

The Disney theme parks around the world are drawing increasing crowds and revenue. In 2013 its Parks and Resorts revenue increased 9%, to $14.1 billion, and the segment's operating income increased 17%, to $2.2 billion. That operating income increase should help drive sales profit growth when it next reports its quarterly earnings on Feb. 5.

The growth came from increases at the company's domestic parks and resorts, Disney Vacation Club, and Hong Kong Disneyland Resort. It would have been even better if not for a decrease at Disneyland Paris and higher pre-opening costs at Shanghai Disney Resort. Yes, Disney financial magic is working in the country with the world's largest population, and that holds part of the key to its future growth in operating income and sales profits.

Back when my children were young a tradition among many of my parental peers was to buy a share or two of Disney stock and ask the brokerage to send us the certificate so we could have it framed. It was such a colorful wall mounting in the children's room, and later on we celebrated what a good investment it was.

In fact Disney is still a good investment. The company operates in five segments -- Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products, and Interactive, which creates and delivers entertainment and lifestyle content across interactive media platforms. 

Disney is not only saving Mr. Banks, it's helping its investors to save for their future.

If you don't own any shares of DIS yet, you might want to wait until just before the Feb. 5 earnings date in case Disney management surprises to the upside. If it doesn't, and the shares fall on the earnings report, you can save more money by buying the aftermath's dip, if a dip is in the cards.

For now, the Disney magic touch keeps looking more like the Midas touch.

At the time of publication the author had no positions in any of the other companies mentioned in this article.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.


Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial writer and editor, he specializes in unique investment strategies, growth with income stocks, overlooked investment themes, tax-advantaged themes, risk management, technologies to capture gains and reduce losses, real estate related opportunities,effective wealth preservation techniques, and the use of ETFs for diversification and asset allocation. He also follows and frequently writes about technology, health sciences, energy and resource companies. Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.

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