Michael Minocchi
Econ 32025
Dr. Engelhardt
Stock Analysis Project
The purpose of this project was to provide a stock analysis by presenting data and
then analyzing the provided data. For my project, I chose the Walt Disney Company
(DIS). I found my data on the Windows Finance application and Yahoo Finance; and
some of the historical facts at the Walt Disney Company website. After analyzing the
data, I was better able to understand what the value of the stock would be to myself as an
investor and I am now able to make a recommendation on whether or not to buy DIS
stock.
The Walt Disney Company was founded in 1923 by Walt Disney. The company
started out as a small time operation where the Disney brothers produced cartoons for
contracts. Today, the Walt Disney Company is a diversified global corporation. The
company combined with its subsidiaries is an entertainment company that operates in five
different business segments. These segments include media networks, parks and resorts,
studio entertainment, consumer products and interactive media. The media networks
segment includes a vast array of operations including those as small as radio stations, to
as large as entire cable television networks. The parks and resorts segment includes
Disney Land and Disney World resorts which are made up of theme parks, hotels, retail
locations and dining locations. The studio entertainment segments produces and
purchases motion pictures for worldwide distribution. The consumer products segment
licenses Disney products to manufacturers, retailers, and publishers throughout the world.
They also operate their own retail and distribution through The Disney Store. The
interactive media segment creates and delivers branded entertainment across interactive
platforms. They do so by making and distributing games for consoles, online, and mobile
games. This helps to perpetuate their brand both in the United States and around the
globe. The Walt Disney Company’s business around the world is affected by its historic
ability to protect its trademarks, copyrights, patents and trade secrets. The Walt Disney
Company exploits this strength in a global economy that closely monitors and regulates
what the worldwide leader in entertainment is doing.
Market Cap
143.62B
Current Price
80.67
Earnings/Share
3.65
P/E Ratio
22.47
Dividends/Share
0.86
Dividend Yield
1.05
Return on Assets
8.05
Return on Equity
15.45
Book Value/Share
25.3
Projected Yield %
1.06
Value Calculations
Total Return Calculations
To better understand the value of the DIS stock, I calculated the value of the stock
based upon the current growth rate of revenue, my required rate of return, and earnings
per share. For comparisons sake, I calculated a worst case scenario, baseline scenario and
a best case scenario. According to the calculations, the DIS stock would increase in value
in both the baseline and best case scenario. It would decrease in value in the worst case
scenario.
To understand whether the DIS stock would be a good investment based upon my
required rate of return, I calculated the total value of the stock based on today’s stock
price, a future stock price (based upon the previously calculated values), and any
dividends. My calculations showed that in a best case scenario, DIS would far exceed my
required rate of return. However, in a baseline and worst case scenario, DIS would
underperform based upon my required rate of return.
My research yielded predictable results for a large company like the Walt Disney
Company. Large corporations can expect around 10% growth in earnings. Large, very
stable, mature organizations can usually expect growth around 5%. Based upon my
calculations, the growth that is currently projected for the Walt Disney Company.
However, matching or even exceeding expected growth rates do not always equate to a
good investment. For someone who is willing to take a smaller return, DIS stock might
be a good investment. For me, while it might be a safe investment, it would not yield the
type of returns that I am looking for. Therefore, in conclusion, I would like to make a
recommendation to not buy DIS stock. Based upon my required rate of return of 11%, I
believe that there are other more attractive options on the market at this point in time.
Works Cited
Disney History. (2014). Retrieved from http://thewaltdisneycompany.com/aboutdisney/disney-history
Windows (2014). Windows Finance App. [Mobile Application Software]. Retrieved from
http://windows.microsoft.com
Yahoo Finance. Walt Disney Company (DIS). (2014, March 12). Retrieved from
http://finance.yahoo.com/q;_ylt=Ar4Xw87dMz3ByyJ_cFuh_QiiuYdG;_ylu=X3o
DMTBxdGVyNzJxBHNlYwNVSCAzIERlc2t0b3AgU2VhcmNoIDEx;_ylg=X3o
DMTBycTIxMmwyBGxhbmcDZW4tVVMEcHQDMgR0ZXN0AzUxMjAwNw-;_ylv=3?s=DIS&uhb=uhb2&type=2button&fr=uh3_finance_web_gs