Stock on Watch: DIS (Disney)

If you’ve been following the news lately, you’ve probably already heard the news that Disney has planned to exit its agreement with NFLX (Netflix) by the end of 2019, saying they will be starting their own streaming service by 2020.

THIS IS HUGE NEWS. 

Recent Earnings: Following the earnings report yesterday, Disney showed that is growth was generally flat to slightly down from the same quarter last year. Revenue from Parks came in 12% higher, but it’s studio segment, its third largest source of revenue, dropped 16% off-setting gains from their Parks. But, with the recent decision to pull its content from Netflix, this should become a huge opportunity for Disney to scoop up even more market share.

The possibilities for Disney moving forward are looking as good as ever though as they move to secure even more exclusive rights for their content. Imagine receiving a 10% discount to all parks if you’re a subscriber to their streaming service, or earning a free year of streaming after taking a Disney Cruise. There are many ways that Disney can pull even more subscribers/visitors into their all encompassing universe.

Couple all of this with the fact that Disney just dropped nearly 5% after its recent earnings quarter and it’s in a very desirable price to start a new position. The stock may suffer more over the short term, but as always with Disney, it will recover and should grow its earnings substantially more as it continues to expand its parks and gets its first taste in the content streaming business.

Though DIS doesn’t pay a mouth-watering dividend, it only pays out 25% of its earnings back to shareholders, meaning it has PLENTY of room to increase its dividend in the future.

P/E Ratio: 18.9                              Payout Ratio: 25%.                 Dividend Yield:  1.46%

 

 

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