For some time now, I have recommended investors consider Walt Disney Co. (NYSE:DIS) as a potential value play, in addition to the impressive growth profile the company is typically known for.
2017 has been a rough year for the magical company, with Disney’s share price decreasing approximately 1% since the beginning of the year. While the company’s share price has rebounded significantly from its 52-week low of just above $96 to the $104 level currently (a gain of approximately 8%), the fact that Disney’s share price has remained relatively stagnant while earnings have grown has led to the low valuation mentioned previously.
At a forward price to earnings (P/E) ratio of less than 16, Disney actually represents a relatively cheap valuation compared to many of the company’s peers in the high-margin world of entertainment.
With a number of high-profile initiatives set to carry the company forward, including a variety of Star Wars related content on the horizon, expectations that Disney’s proposed streaming service will turn out to be a hit are beginning to take shape. With many of the aforementioned initiatives currently sitting in the pipeline and set to be capitalized upon over the next few years, a long-term bet on Disney at current levels appears to be a very prudent play, given the lack of short-term catalysts for Disney stock.
Recent announcements by Disney’s management team that the company is moving forward with more aggressive discussions on acquiring assets from 21st Century Fox (NASDAQ: FOXA) has reinvigorated the growth story for many investors, and I expect continued investments from Disney’s management team to further the company’s stock price, making this a great play for both the long and the short term.
Invest wisely, my friends.
