DIS

Lone Ranger Can’t Ruin Disney’s Free Cash Flow

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Tuesday after the market close, media conglomerate Disney (click ticker for report: ) announced slightly disappointing third-quarter results. Revenue fell slightly short of consensus expectations, growing 4% year-over-year to $11.6 billion. Earnings grew a mediocre 2% year-over-year to $1.03 per share (excluding one-time items), which was actually slightly better than consensus estimates. Though headline numbers were weak, free cash flow for the third quarter surged 27% year-over-year to $2.7 billion, equal to 23% of total revenue. The big disappointment during the third quarter came from Disney’s Studio Entertainment business. Revenue declined 2% year-over-year to $1.6 billion, while operating income fell 36% year-over-year to $201 million. This comes as no surprise as The Lone Ranger is already considered a flop. Since … Read more

Disney Contract Extension Outshines Weak Revenue Growth at Hasbro

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Monday morning, Dividend Growth Newsletter portfolio holding Hasbro (click ticker for report: ) reported slightly weaker than anticipated second quarter results. Revenue declined 6% year-over-year to $766 million, well below consensus estimates. Earnings per share, adjusted for a one-time charge, also came in below consensus expectations, falling 12% year-over-year to $0.29. Year-to-date, free cash flow is up to 66% to $245 million, which equates to 17% of revenues (an excellent number). Though headline numbers weren’t quite as strong as anticipated, the market is focused on the contract extension Hasbro inked with Disney (click ticker for report: ) to keep Marvel and Star Wars products exclusive to Hasbro. We’re not surprised by the deal extension, but some market participants may have … Read more

Fourth of July Weekend Highlights the New Norm for Disney

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The recently passed Fourth of July weekend once again brought moviegoers several new films to watch. Disney (click ticker for report: ) and Comcast’s Universal (click ticker for report: ) went head-to-head with The Lone Ranger and Despicable Me 2, respectively. The results are in, and the clear winner was Comcast’s Despicable Me 2, which earned a record $142 million during its first five days. The Lone Ranger wasn’t even close, grossing $48.9 million over its first five days—a number that wouldn’t look so bad, except that the film cost Disney an estimated $375 million to create and market. An Uneven Track Record Although we like Disney’s future prospects–given its robust pipeline of films related to The Avengers and Star … Read more

Amazon’s Expansion Knows No Bounds

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On Tuesday, we received a variety of information about Amazon’s (click ticker for report: ) expansion into different product lines. The company is looking to expand its AmazonFresh same-day grocery delivery service and could enter as many as 40 markets this year. Additionally, the firm entered into the highest streaming content contract ever, purchasing the rights to stream over 4,000 episodes of Viacom (click ticker for report: ) TV shows. Let’s dig into the details. AmazonFresh For years, people have speculated that the end-game for Amazon was to build so many warehouses that it could effectively offer same-day shipping on any product and compete with brick-and-mortar shops on the basis of time. Thus, the expansion of AmazonFresh comes as little … Read more

Strong Earnings Powers CBS; Tony Stark Boosts Disney

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Media stocks have been on a fantastic run as of late, and the trend looks to continue after CBS (click ticker for report: ) posted great results and Disney’s (click ticker for report: ) Iron Man 3 put up a blockbuster debut at the box office internationally and domestically. Let’s take a look at recent events. CBS CBS posted strong first quarter results, driven by a 6% year-over-year increase in revenue to $4 billion, which resulted in a 24% jump in operating earnings per share to $0.73. Both figures easily exceeded consensus expectations. Strong headline results consummated in $553 million in free cash flow. Results were solid for CBS across all of its segments, though entertainment led the charge with … Read more

A Dish/DirecTV Merger Would Be Golden

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After a potential acquisition target of DirecTV (click ticker for report: ) was taken off the market, chatter of a DirecTV-Dish Network (click ticker for report: ) merger has escalated. The big obstacle, in our view, would be anti-trust hurdles, and given recent trends in US anti-trust regulation, that could be difficult to defeat. However, let’s take a look at what could happen if regulators allow it. Increased Leverage Over Content Creators One of the consistent themes we’ve been hitting on over the past year in the media space has been the rising cost of content. Netflix (click ticker for report: ), Coinstar (click ticker for report: ), Amazon (click ticker for report: ), Hulu, cable, and satellite are all … Read more

House of Cards – A Sign That Netflix Can Become a Content Creator

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Since activist investor Carl Icahn took a public stake, shares of Netflix (click ticker for report: ) have been on a tear. Shares really took off after the firm reported strong earnings for its fourth quarter and a bullish outlook for the first quarter of 2013. Shares have nearly doubled in 2013 alone, and it seems the market is getting even more bullish on Netflix. In our view, this has less to do with recent earnings trends, but rather, we believe the success of House of Cards has been a positive catalyst for the stock. The show has received fantastic reviews with an aggregate score of 9 on IMDB.com, and it has been mentioned in the same breaths as blockbuster … Read more

Regal Posts a Strong Quarter; Shares Look Undervalued

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Movie theater owner/operator Regal (click ticker for report: ) announced strong fourth quarter results last week. Revenue jumped 18% year-over-year to $723 million, easily exceeding consensus estimates. Earnings were also stronger than consensus expectations, more than doubling compared to the year ago period to $0.28 per share (adjusted for certain items). The firm’s fourth quarter greatly benefitted from a favorable release slate, which tends to be one of the primary drivers of performance. In addition to more high-grossing films, management noted that the breadth of films also helped drive ticket sales during the quarter. Attendance grew 15% year-over-year, but average ticket prices were 2% higher and average concessions per patron jumped 3%. Regal’s price increases and large jumps in attendance … Read more

Dividend Growth Portfolio Holding Hasbro Boosts Dividend; Cash Flow Remains Fantastic

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After pre-announcing weaker than anticipated fourth quarter results at the end of January, Dividend Growth Newsletter portfolio holding Hasbro (click ticker for report: ) updated investors with its final results. Revenues were down about 4% year-over-year to $1.28 billion, while earnings for the quarter were 13% higher year-over-year at $1.20 per share (net of restructuring charge). As a result, full-year earnings were $2.55 per share, down 10% compared to 2011. However, excluding restructuring charges and foreign exchange variations, earnings for the year were $2.91 per share—a slight increase on a year-over-year basis. As Valuentum members are well aware, Hasbro’s stock performance has been very strong as of late (and such equity performance doesn’t consider its hefty dividend payout). Although earnings were not amazing by … Read more

Star Wars Getting ‘The Avengers’ Treatment from Disney

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Entertainment giant Disney (click ticker for report: ) announced solid fiscal first quarter results Tuesday after the market closed. Revenues jumped 5% year-over-year to $11.3 billion, exceeding consensus estimates. Earnings fell 4% year-over-year to $0.77 per share, higher than consensus predictions. Disney’s results were solid, but we thought the most important takeaway came from CEO Bob Iger during an interview with CNBC. Iger confirmed that the firm will be making Star Wars movies that deviate from the story’s sequence of events. We believe this implies movies driven around certain characters and their respective origins or backstories. This is essentially what the company successfully accomplished with The Avengers, and we think the results could be even better, given the immense popularity … Read more