Tuesday, January 8, 2013

Walt Disney Is A Compelling Investment, For Growth Investors



Walt Disney (DIS) is an entertainment company with a diversified portfolio of businesses. I anticipate the company to grow earnings, making it a compelling investment opportunity going forward.

The fastest growing revenue categories were the Parks and Resorts division. Net income grew most from the Parks and Resorts, and Studio Entertainment divisions of the company. Parks and Resorts grew in net income by 22% over 2011. Walt Disney's primary focus is investment into its parks, resorts, and other properties representing $3.7 billion/80% of the cash spent on investment activities. The growth in revenues and net-income from Parks and Resorts will succeed, and is the biggest revenue growth category for the company going forward.

The income elastic demand of movies is 3.41. This means that for each percentage increase in income, consumption of movies will increase by 3.41 times. This is an important indicator as Walt Disney's net income from Studio Entertainment (movie franchises like the Avenger, Iron Man) will continue to grow and will represent a larger percentage of net income going forward. In 2010, income GDP per capita worldwide was at $7,329; by 2020, this is forecasted to be at $9,388. Income on a world-wide basis is likely to grow by at least 28% over the decade; this improvement in income will make for a larger number of movie theater visits, and will contribute to Walt Disney's Studio Entertainment growth by approximately 95% over a 10-year period. The economic outlook for Walt Disney remains strong as consumption from the emerging middle class will contribute to Walt Disney's bottom line, by a large margin.

Conclusion:

Investors should remain optimistic on Walt Disney, the business model works; it grows, and is well-managed. What more could investors ask for?   The conclusion remains simple: buy Walt Disney on long-term growth.

Read & See More Charts: http://seekingalpha.com/article/1099321-walt-disney-is-a-compelling-investment-for-growth-investors?source=email_rt_article_readmore



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