In This Article:
1. Company
Walt Disney Co. (NYSE:DIS) is one of the greatest content producers in the world. The company has been around for nearly a century and is a powerhouse that produces $12 billion in net income and $9 billion in free cash flow annually. These numbers are thanks to the company's ability to produce great content that consumers want. And its large content library and plans for subscription service Disney+ will lead to expanding profits into the future.
Disney has also continued its domination in animation and expanded its movie studio content with the purchase of Marvel Entertainment in 2009. Thanks to this purchase, Disney has set box office records with its superhero franchises. Disney further expanded it's business and content through the purchase of 21st Century Fox and increase of its stake in Hulu to 60%.
At its annual shareholder meeting this year, Disney announced Disney+, its online streaming platform, which is set at $6.99 per month, which is lower than Netflix, the dominant online streaming platform.
2. Disney history
Disney was founded in 1923 by Walter Elias Disney and went public in the 1930s.
Starting in the late 1980s, Disney's animation enjoyed a series of commercial and critical successes. Disney continued to grow and expand in the 1990s. Under Michael Eisner's leadership, Disney earnings grew annually at more than 20% a year. The 1990s saw some of Disney's best animation movies, ranging from Toy Story to the Lion King. Also, the company was able to create numerous hit kids' animation series in the 1990s as well.
Starting in 2005, Disney went on an expansion spree led by its new CEO Bob Iger. The era of Iger kicked off in 2006 with the $7.4 billion all-stock purchase of Pixar. Iger went on to acquire Marvel Studio for $4.24 billion and Lucasfilm for $4.05 billion. These acquisitions have expanded Disney's content library and produced some of the most profitable movie franchises in Disney history. In 2017, Disney acquired some of 21st Century Fox's assets for $71.3 billion. When the merger was complete, Disney owned movie rights to X-Men, Fantastic Four, Galactus and Deadpool, which expanded their Marvel Universe.
3.1 The moat
The company produces a return on equity of 27.6% and assets of 7.7%. Disney's gross margins stand at 44.3% and free cash flow margins at 16.56%. These numbers prove that Disney has a moat around its business. Over the last decade, Disney has grown earning per share at 15% and free cash flow at 14%. Disney's earnings per share going back 20 years have been moving upward with a few down years caused by recessions and crises. This also proves that Disney has a strong and large economic moat.