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Disney: "Unprecedented Content"

03/13/2017 7:00 am EST


John Buckingham

Editor, The Prudent Speculator

Congratulations to value investing John Buckingham on reaching his 30th year with Al Frank Management; this month is also the 40th anniversary of his newsletter, The Prudent Speculator. Here's a look at a stock he considers a core holding.

Disney operates one of the largest diversified media companies in the U.S. and is a global leader in producing branded family entertainment.

Shares have made quite a recovery since October, after dipping as low as $90.83. In fiscal Q1 2017, Disney earned $1.55 per share on $14.8 billion of sales, compared with analyst estimates of $1.49 and $15.3 billion, respectively.

Strength in Parks & Resorts (attendance at the new Shanghai Disneyland topped 10 million in its first year, though domestic park attendance dropped 5%) and the success of Studio — Rogue One: A Star Wars Story was a blockbuster — helped offset a 7% drop in ESPN ad revenue and declining ratings for SportsCenter and Monday Night Football.

Additionally, Disney announced plans to raise prices for single-day Disneyland tickets for adults and children between 2.1% and 4.8%.

While DIS faced some headwinds in the first quarter, we like that the company has a solid pipeline of park improvements coming up, including Star Wars Land (2019) and an Avatar-themed resort (May 2017).

A new Hulu-based online streaming service has also made it to beta testing (a final testing phase before wide public release) and management expects that upgrades to ESPN mobile will help retain existing TV customers. With unparalleled content and characters, we think DIS should be a core holding.

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