Purchase Date: October 13th, 2017
Purchase Price: Call Option Expiring Jan 2020 for $95, trading price was $97 at time of purchase.
Current Price: [stock_ticker symbols=”DIS” show=”name” number_format=”dc” decimals=”2″ static=”1″ speed=”10″ class=””]
Why We Like Disney
Disney (NYSE: DIS) has incredible brands that can simply never disappear. Let’s run through a few:
- Pixar
- Marvel
- LucasArts
- ABC
- ESPN (we’ll get to that)
Disney is trading at a price to forward earnings of 15x, while the rest of the S&P 500 is over 19.
Why is it trading at such a discount? Their media revenue is plummeting due to cord cutting, and ESPN is the main perpetrator.
But let’s suppose that media went out of business tomorrow – Disney made $6 billion in revenue from media networks last year, which was roughly 10% of their $55 billion in revenue, and their 25% operating margin to find what they’ll be trading at.
If media went under today, Disney’s net income would be $7.5 billion instead of $9 billion, which means they’ll be trading at a price to sales of 3x, a 20x Price to Earnings, and, a Price to Forward Earnings of 17.6, which is still cheaper than the S&P 500!
This is an incredible opportunity to buy a world class company.