Many of us believe that Disney stock prices are too low considering the overall success of the company and the great success of the recent Star Wars movie, with at least two more movies in the works.
In just 20 days, Star Wars has the No. 1 domestic box office haul ever. It has not even launched in China yet, the No. 2 market worldwide. The success of Star Wars is not only going to drive merchandise significantly higher this year, but also demand for the original films, and also in Walt Disney (NYSE:DIS) theme parks. And to put the icing on the cake: Disney has another two Star Wars films lined up for future years, all of which are likely to be equally lucrative blockbusters.
Let’s look deeper into the media world: DIS also has the Marvel Universe, and a dominant kids production that pumps out at least one or two blockbusters each year. With the new Captain America movie later this year, and sequels to Star Wars, DIS is all set to dominate the top of best movies ever for the next five years to come, with several billion dollar movies from its top franchises over this span.
As explained, this continued success feeds into a theme park business that gains pricing power every year, and maintains its popularity. It also gives the company leverage over media outlets that want to distribute its content, allowing DIS to charge partners whatever it wants.
Last but not least, DIS has ESPN. While ESPN has had its fair share of problems, and likely overpaid for rights with the NBA ($1 billion), it is now a leaner company (job cuts) that continues to be the worldwide leader in sports. So yes, DIS had a speed bump with ESPN and subscriptions, but fact is that the NFL, NBA, and NCAA basketball and football continue to grow in popularity year-after-year, and that bodes well for the long-term direction of ESPN, and DIS.