The Man

Walt Disney or “Walt” as he was more commonly known was a film and television producer born in America in 1901 who became famous for being a pioneer of cartoons and as the creator of Disneyland. Born in Illinois, USA, Walt Disney and his brother Roy founded Walt Disney Productions, which unknown to them at the time, was to become one of the best known motion-picture production companies in the world.

Disney himself, was an innovative animator and as we all know, created the cartoon character Mickey Mouse. He won 22 Academy Awards throughout his lifetime and was the founder of Disneyland and Walt Disney World theme parks. Disney was one of five children, spending most of his childhood in Missouri, where he drew, painted and sold pictures to friends and neighbours. While at school, Disney took drawing and photography classes and was a contributing cartoonist for the school paper. In 1919 Disney started experimenting with a camera, eventually deciding to open his own animation company. He then made a deal with a local theatre to screen his cartoons which turned out to be hugely popular. Disney then acquired his own studio, upon which he bestowed his own name. Disney and his brother, Roy, soon pooled their money and left for Hollywood. They produced a series of short fairy tales combining live action and animation, called Alice in Cartoonland. A few years later when sound found its way into film, Disney created Steamboat Willie with his own voice as Mickey Mouse. The cartoon was an instant sensation and the rest is history.

Walt Disney died in 1966 but left behind a huge legacy, including a multitude of animated shorts and films that he produced during his lifetime, the company, theme parks and an animation studio which bears his name.

The Company

These days, Walt Disney’s name is synonymous with family entertainment. The theme parks, toys, films and television shows that carry on his legacy are adored by millions of people the world over.

Over a year after its release, Walt Disney continues to reap the rewards of Frozen, the most successful animation movie ever made. Merchandising, theme park attractions, and DVD sales still continue to drive Frozen revenue, which has already netted at least $2.2 billion via box office and merchandise sales. Disney’s Frozen movie took over a billion dollars at the box office worldwide, claiming its trophy for the highest-grossing animated film ever, and not far off the top of the highest-grossing films in general.

It’s not just box office takings that makes Disney so successful. There are also the franchises that Disney movies create with toys and other merchandising. In the last quarter (2014), Disney’s merchandising business continued to grow with a 22% rise in revenue and a 46% increase in profits, year on year. It’s no wonder that investors are excited!

The Stock

Although consistently one of the more popular stocks, Disney stock is not very cheap in the industry at present with a P/E of 23 after its recent share price increase of over 30% in just the last 5 months alone. However, with more great movies in the pipeline, Disney’s share price could still have room to grow even further. Disney’s last earnings report revealed revenue growth slightly outpaced the industry average of 7.7%. Revenues slightly increased by 8.8% since the same quarter in the previous year. Growth in the company’s revenue has helped elevate the earnings per share.The company has also demonstrated a pattern of positive earnings per share growth over the past two years, a trend which looks set to continue.Net operating cash flow has significantly increased by 53.05% to $1,855.00 million compared to the same quarter last year. In addition, the company has also surpassed the industry average cash flow growth rate of 47.71%.

Investors have begun to recognise these positive factors which have helped drive the company’s shares up by a sharp 33.85% over the past year which has eclipsed that of the S&P 500 Index. Although the stock’s sharp rise has already helped push it to a level which is relatively expensive in comparison to the rest of the industry, its strengths justify the higher price levels. So, is Disney stock a good investment? Having displayed a solid stock price performance and such a stellar track record, we don’t recommend you let it go!