One Reason Disney (DIS) Stock is Rising

NEW YORK (TheStreet) -- Shares of The Walt Disney Co. (DIS) are climbing by 1.01% to $111.49 in Monday's mid-day trading session on the company's unmatched ability to wring profits, the CEO's influence, and the company's expansions, Barron's reported.

"This world's appetite for great entertainment is bigger than it has ever been and probably bigger than Wall Street realizes," CEO Bob Iger stated in Barron's.

Disney has far more deals with merchandise companies than its rivals like Viacom (VIA), Time Warner (TWX), and DreamWorks Animation SKG (DWA), according to Sterne Agee. For example, it has 37% more deals than Viacom, 56% more than Time Warner and seven times as many as DreamWorks.

It's also a good time to buy its stock, as shares could rise another 50% over the next three years, Barron's noted.

Additionally, CEO Bob Iger has been a key factor in the company's success. He has spent richly on park expansions and upgrades, and over the next three years, Disney's cash flow is expected to jump 30% in the fiscal year ending in September 2016.

Last May, Disney opened its first Shanghai retail store and next spring, the company will open Shanghai Disneyland.

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 revenue growth, growth in earnings per share, increase in net income, notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins."

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

  • DIS's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DISNEY (WALT) CO has improved earnings per share by 13.9% 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 ($5.08 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 10.0% when compared to the same quarter one year prior, going from $1,917.00 million to $2,108.00 million.
  • 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. In comparison to the other companies in the Media industry and the overall market, DISNEY (WALT) CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has increased to $2,918.00 million or 15.47% when compared to the same quarter last year. In addition, DISNEY (WALT) CO has also modestly surpassed the industry average cash flow growth rate of 15.23%.
  • You can view the full analysis from the report here: DIS Ratings Report

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