Tracey Ryniec and David Bartosiak, Stock Strategist at Zacks Investment Research, debates Disney’s (DIS) future as its movie division, led by the upcoming re-launch of the Star Wars franchise, and the amusement parks are performing well, but its media business, including ESPN, is struggling.
Did you already buy tickets for Star Wars: The Force Awakens even though it isn’t out for almost 2 months?
If you did, you aren’t alone as Fandango is reporting that first day ticket sales for the movie, which is out Dec 19, were the highest in its history, surpassing the original Hunger Games advance ticket sales by a factor of 8. Other ticket vendors, including those in the United Kingdom, were reporting similar numbers. Tickets sales to see the movie in IMAX theaters also set a new 1-day record, beating out the likes of the Dark Knight Rises and The Avengers.
With its parks, Disney also has something to look forward to when Shanghai Disneyland opens in 2016. It has also recently raised season pass ticket prices at Disneyland in Anaheim to control demand, especially during peak tourist season around the winter holidays. Disney is expected to add Star Wars land in the next several years, as construction begins in 2016, which will add even bigger crowds.
But in its media business, the story isn’t so rosy. The company has been laying off employees at ESPN, including many of its top tier on-air talent, to try and trim costs as the cable landscape changes.
Estimates for fiscal 2015 and fiscal 2016 have been inching higher but Disney is only expected to see 9% earnings growth next year.
It’s also not cheap, with a forward P/E of 19.
David examines the chart to see if investors should expect a break out or a break down in the shares.
Are Tracey or David fans of buying the stock right now? Can Star Wars Save Disney?
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