The Company in a Nutshell
- DIS has built one of the most highly recognizable brands in the world.
- Disney can monetize its content in many ways, across many segments.
- The company struggles to generate profit from its streaming services
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What the CEO said: What we say:Investment Thesis
Through the acquisition of Pixar, Marvel, Lucas Film, and Fox, DIS has built a virtually timeless collection of blockbuster movies. DIS successfully launched its streaming services, with over 224M paying members as of the end of 2023. This is roughly 90% of Netflix’s subscriber base. Most families and sports enthusiasts will likely be willing to pay more to access additional content and subscribe to DIS in addition to other streaming services. DIS intends on spending several billion dollars per year on content creation. This is probably a problem here: streaming services aren’t profitable yet. Disney remains in the midst of a major restructuring and there are many unanswered questions. While the company generated strong revenue growth from its Parks segment, DIS continues to lose money in its Direct-to-Consumer segment (streaming services). The situation is improving, but there is a long path ahead and investors are losing patience. At the end of 2023, DIS reinstated a small dividend and showed improvement (e.g. it is generating lower losses) in its streaming services. The dividend was quickly increased in 2024. Maybe the company is really getting back on track!Dividend Triangle
5-Yr Rev. Growth | 0.00 % |
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Potential Risks
While the media network segment (driven by ESPN) is a cash cow, the steady decline of cable subscribers is a source of concern. The cost of producing high-quality content for both TV and streaming services could affect Disney’s margins going forward. The pandemic led to an increase in subscribers for its streaming services, but also opened the door to fiercer competition in the industry. Disney+ subscriber growth may be slower going forward, with maturity in North America and the war’s effects on Europe’s economy and consumer spending. DIS has not yet generated profit from its streaming services and got into more debt to acquire the remaining stake of Hulu from Comcast. The company is not generating the same cash flows that it used to, and debt could be a concern moving forward. Finally, Disney was involved in more political drama in Florida because of its production choices. Activist investor Nelson Peltz launched another campaign to have a seat at the board. You can prepare for more drama in 2024!
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Dividend Growth Perspective
The company decided to suspend its 2020 dividend in response to Covid-19. DIS still has cash in the bank but made a sound decision to suspend the dividend. The company finally announced a small dividend at the end of 2023 (will be paid in 2024) of $0.30/share.
After reinstating its dividend in late 2023, the company announced a dividend increase of 50% already for 2024. We have reviewed its dividend safety score from 2 to 3.
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Video Tutorial: How to Read the Stock Cards DDM ValuationMarket Cap | 0.00 M |
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- All financial metrics are updated weekly.
- The DSR PRO rating and Dividend Safety Score are updated quarterly.
- The analysis (investment thesis, risk potential, dividend growth perspective and DDM calculation) is reviewed every 6 months.
- The PDF format includes only comments (no metrics) and is reviewed every 6 months.