Walt Disney (NYSE:DIS) is a king of content but it needed to deliver that content to consumers the way they want to consume it. Since 2016, it has begun transforming for that need…
Should You Buy Disney Today?
The last year was a major investment year for Disney, namely Twenty-First Century Fox for $71 billion and capital expenditures (“CapEx”) that were up 9.2% year over year to $4.9 billion, and the CapEx is set to increase by a further 10% next year.
Moreover, Disney expects the DTC & International segment to generate ~$800 million in operating losses for fiscal Q1 2020 but to be accretive to EPS for fiscal 2021 and realize cost synergies of more than $2 billion from operating efficiencies by 2021.
Because Disney is fully valued today, we think there are better investment ideas out there, such as from our top dividend ideas list. Investors may just get a better entry point in the coming 12 months.
Disney is using much of free cash flow to reinvest back into the business, making the stock look expensive from a price-to-free-cash-flow perspective.
Disney has been investing in its brands, content, and streaming services in a big way. We like the wide-moat company as a core holding for the long term. Due to its valuation and streaming service investments that are expected to lead to substantial operating losses initially, we rate Disney as a “hold” for now.
Unfortunately, we have maxed out the word limit for this excerpt. But you can read the Seeking Alpha article (with images and graphs) here: The King Of Content Is Bigger And Better And This Is What I’m Doing
If you like what you've just read, consider subscribing via the "Subscribe Here" form at the top right so that you will receive an email notification when I publish a new article.Disclosure: As of writing, we’re long DIS.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
Get Exclusive Articles from me on Seeking Alpha
- Access my portfolio of high-quality U.S. and Canadian dividend stocks.
- Real-time updates of when I buy or sell from this portfolio.
- Get best ideas of the top 3 dividend stocks from my watchlist. Updated each month.