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| Endgame vs Star Wars, whoever wins, Disney still win. That's content dominance |
But whether it is Endgame or Star Wars, the one that is set to benefit is definitely Walt Disney Co. And it is reflected in its share price.
Compared to a year ago, Walt Disney has seen its share price hit an all-time closing high of US$139.92, a gain of 43.25% from a year ago, which significantly outperformed the S&P 500 Index that has seen a total return of 12.32% during the same period. And if you don't think that is impressive, the 12-month trailing PE for the Mickey Mouse company still stood at 20.2 times only, which is pretty reasonable given a company that has a dividend yield of about 1.3%, strong content base and embarking on a new streaming services as well.
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| Disney at its all-time closing |
And if you have been to the cinema for The Endgame recently, chances are that you will see plenty of trailers that are also distributed by Disney. Aladdin, Lion King, the recently concluded Jumbo as well as the upcoming Star Wars: The Rise of Skywalker in December this year.
So, really, whether it is the Endgame taking the top record or would it be the upcoming Star Wars: The Rise of the Skywalker, it will be Disney that is reaping the return.
Success on blockbuster will put CEO's high salary issues aside for now
The thing about the stock market is that people tend to forget about some of the problems of a company in good times. For Disney, its success on the blockbuster office will help to put the issues surrounding the high salary for its CEO, Bob Iger aside for now.
While you might not think US$65.6 million compensation for a CEO is an issue, Abigail Disney, the granddaughter and grandniece of brothers and co-founders Roy and Walt Disney—called the pay ratio “insane” in a tweet on Sunday.
“What on earth would be wrong with shifting some of the profits—the fruits of these employees’ labor— to some folks other than those at the top?” Disney wrote.
That of course might have to be taken with the context. Disney has a revenue of US$59 billion and a net profit of US$13 billion.
The new challenge: Streaming Services
Then, there is the big challenge: the streaming competition when Disney unveil Disney+, its new streaming services, which will be a challenge to Netflix.
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| Disney+ sets to add into streaming services competition |
It is still a question mark whether Disney's streaming services can take off but at US$6.99 per month, that seems like a very competitive pricing even for Netflix. Investors need to keep in mind that Netflix's strategy has already bear fruits and is seeing return on its investment based on its financial results. Disney's entry into this space could give them more room to grow given the large content library that it owns especially after the acquisition of Fox.
So, will you buy Disney now that the share price has run up? As usual, I wouldn't chase after stocks that have run up but Disney is a company that I love. If I were to invest into the company five years ago, I would be seeing a double-digit return annually, excluding the dividend. I doubt the rally can sustain though given the sharp jump in share prices but I believe it makes sense for investors to accumulate its shares in the long run.
Just go to the mall today and you will see so much of Disney brands in a lot of varieties of products. While you might not be very happy about the excessive pay given to its CEO, the company has not neglected its shareholders.
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