Will Disney (DIS) Stock Be Affected By This Netflix (NFLX) Canada Deal?

NEW YORK (TheStreet) -- The Walt Disney Co. (DIS) and Netflix Inc. (NFLX) today announced the signing of a multi-year licensing deal in which Netflix would be the exclusive subscription video service in Canada for Disney's live action and animated films, Variety reports.

Beginning in 2015, Netflix will stream feature films from the Disney brands, including live action and animated movies, Disney Nature, Marvel, and Lucas Films, eight months after their release in theaters, which is faster than films are usually released to pay-TV services.

Financial terms of the deal were not disclosed, Netflix stock opened higher by 0.28% to $445.69 on Thursday, and Disney stock is up by 0.30% to $85.61.

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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 solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 30.12% and other important driving factors, this stock has surged by 33.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DIS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DISNEY (WALT) CO has improved earnings per share by 30.1% 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 $3.38 versus $3.12 in the prior year. This year, the market expects an improvement in earnings ($4.19 versus $3.38).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 26.7% when compared to the same quarter one year prior, rising from $1,513.00 million to $1,917.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 10.4%. 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.
  • You can view the full analysis from the report here: DIS Ratings Report
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