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The Walt Disney Co DIS

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Strong Third-Quarter Results for Disney, Subscriber Growth at Disney+ Driven by Hotstar

Neil Macker, CFA Senior Equity Analyst

Analyst Note

| Neil Macker, CFA |

Disney posted a strong fiscal-year 2021 third quarter as revenue just beat FactSet consensus and EBITDA came in well ahead of expectations. Disney+ added 12.4 million customers to end the quarter at 116 million subscribers due in part to the return of cricket, still below the 21 million added in the fiscal first quarter but well ahead the 8 million in the second quarter. While subscriber growth has slowed down, we still expect robust long-term subscriber growth, particularly outside the U.S. as the firm continues to add more original content and increase the library depth in the Star sub brand. We maintain our wide moat and raise our fair value estimate to $170 from $154 due to the lower-than-expected streaming losses and stronger subscriber growth.

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Company Profile

Business Description

Walt Disney owns the rights to some of the most globally recognized characters, from Mickey Mouse to Luke Skywalker. These characters and others are featured in several Disney theme parks around the world. Disney makes live-action and animated films under studios such as Pixar, Marvel, and Lucasfilm and also operates media networks including ESPN and several TV production studios. Disney recently reorganized into four segments with one new segment: direct-to-consumer and international. The new segment includes the two announced OTT offerings, ESPN+ and the Disney SVOD service. The plan also combines two segments, parks and resorts and consumer products, into one. The media networks group contains the U.S. cable channels and ABC. The studio segment holds the movie production assets.

Contact
500 South Buena Vista Street
Burbank, CA, 91521
T +1 818 560-1000
Sector Communication Services
Industry Entertainment
Most Recent Earnings Jun 30, 2021
Fiscal Year End Oct 3, 2021
Stock Type Classic Growth
Employees 180,000

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