Company – The Walt Disney Company
Stock Ticker – DIS
Stock Price - $97.11 (June 7, 2022)
Industry – Mass Media and Entertainment
The company was created in 1929 by Walt Disney. Originally a
studio creating animated cartoons, Disney Brothers Studios
becoming successful by the 1950’s and later took the name of The
Walt Disney Company in 1986. With Mickey Mouse as its mascot,
Disney has developed into an entertainment company with parks,
films and products.
Looking at the liabilities on the balance sheet, Disney has increased
their debts over the last three years by 227% (Journal, 2022). One of
the main reasons for this large increase in liabilities is the accusation
of Fox (Bryant, 2021). The purchase has created potential risk due to
the limited cash flows from their current revenue outlets due Covid
and the decrease of tourism over the last three years. With an uptick
in the population getting out and traveling once more, the company
has the potential for future revenues to increase. The debt-to-equity
value ratios are lower for Disney compared to other companies
which limits risk for future earnings.
Valuation policies –
A Market Multiple-based Approach
Discounted Cash Flow Valuation
Based on their valuation approaches, I feel they the discounted cash
flow valuation is a wise decision as it allows the company to value
their investments on it expected future cash flow. With their large
presence film and animation, it is difficult to cost due to the
uncertainty which could lead to potential variances, however the
average of productions over time should level these variances out.
References:
Bryant, C. (2021, May 19). Disney Stock: Capital Structure Analysis
(DIS). Investopedia. Retrieved July 7, 2022, from
https://www.investopedia.com/articles/markets/051116/disney-
stock-capital-structure-analysis-dis.asp
Journal, W. S. (n.d.). Dis | Walt Disney Co.. annual balance sheet - WSJ.
The Wall Street Journal. Retrieved July 7, 2022, from
https://www.wsj.com/market-data/quotes/DIS/financials/annual/bal
ance-sheet
