Disney, a true global franchise brand that has never had a bigger global stage for its Studio and Parks and Resorts products.
For Disney (DIS, quote), valuation is the biggest issue – the company is clocking on all cylinders. The international opportunities for Disney are largely ahead of them with only 18% of their operating profit from outside the U.S.
In the short run however, ESPN remains the most important segment for Disney with 35-40% of operating income. Global success of Frozen ($1.2Bn already!) will drive a 15-18% growth number in Studios segment. Expect more from Lucas Films in the second half of the year with a Star Wars comeback. This is expected to be a big driver.
The Parks and Resorts segments are seeing unquestioned momentum. This segment makes up over 31% of the total revenue stream and is growing.
Disney stock is not cheap. Disney trades at 17.8X ’14 and 22X current EPS. These numbers are in line with sector. Thus, we expect solid numbers this evening and inline guidance. Disney remains a strong long term holding, but in the short run, we think the stock struggles to breakout to fresh highs