Stock Performance Review: Walt Disney Company (DIS)

Many people pick companies that they are familiar with to invest in. This is actually a pretty good way to develop a list of possible stocks to buy. After all if you buy the company's product, chances are that a lot of other people do as well. One well known company is the Walt Disney Company. Their products have been popular for decades, and they have been turning a profit for most of their operating history. However, before you invest in the Walt Disney Company it is a good idea to examine the company's recent stock performance, as well as take a look at what the entertainment industry looks like in terms of economic stability and growth.

What the Walt Disney Company (DIS) Does

The Walt Disney Company (DIS) is an entertainment empire. Not only do they produce movies and operate theme parks, but they also produce television programs, they own several different cable television networks, they own a television network, and they manufacture and distribute merchandise and consumer goods. This broad spectrum and brand diversity has allowed the Disney Empire to grow. However, it has also left it vulnerable to the fluctuations and pitfalls of a lot of different industries.

52 Week Performance Review of DIS

Over the 52 week period ending on 08/22/06 the value of DIS has fluctuated between 22.89 per share and 31.03 per share. On 08/22/06 the value of this stock ranged between 29.51 and 30.05 per share. This shows that the stock is holding onto its higher value, and in fact analysts have projected that DIS should increase to 33.56 per share within the next year. Currently this stock is only paying a dividend and yield of .9% per share.

Historical Performance Over the Last Five Years

Over the last five years DIS has had its ups and downs like any other stock. Unfortunately in 2002 DIS experienced a major set back in its value. This was probably due to the internal problems that the company was experiencing with its management structure. As the company corrected their internal problems the value of the stock rebounded from its low value in 2002. Since 2002 the stock has consistently increased in overall value year after year, although the recovery has been very slow.

Strengths of DIS

DIS has the potential to recover from the problems that it experienced in the early part of this century. This is largely due to its brand identity. Families love Disney because it is a name that they have been exposed to since they were children. The products that are produced by Disney are cutting edge, family friendly, and high quality. It would take a real disaster to damage this company to a point where their stock would not recover from a set back. Their diversity in investments is also a strength that has allowed them to prosper during set backs in one of their areas of expertise. They have expanded into television, cable television, and merchandising which has help to support their film and theme park enterprises during slumps in these industries. Finally, DIS has shown good revenue growth in recent years, especially when compared against their competitors' numbers.

Weaknesses of DIS

DIS has some internal weaknesses that they are still trying to work out. Changes in management has been a major liability for this company in the past, however, it does seem like this problem is waning. Another problem that faces DIS is that the entertainment industry is changing. Major movie companies are shifting from producing several mediocre film projects per year to one or two high quality franchise films a year. Another change in the industry, especially in the animated film section of the Disney company, is that more Indie companies are entering the market. DIS now has to compete for film audiences, as Pixar, Sky Blue, and Dreamworks Animation have been consistently producing high grossing animated films each year taking market shares away from the Disney Company.

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