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You can bet that there will be a party and fireworks somewhere around Cinderella’s castle tonight as the Disney share price (NYSE:DIS) reached a record high following the release of its first quarter results for FY2015 that ended on 27 December 2014.
I can’t remember the exact time that I originally began to consider purchasing Disney stock, but it was somewhere late in 2001. Disney shares had been hanging around $30.00, but had declined to under $20.00. I thought it might be a good time to buy. I started doing my research, which was a bit more tedious and time consuming 14 years ago. Nonetheless, I began to follow DIS. During the ensuing 18 months, I watch the shares struggle to stay above $20.00 and, in fact, at one point, above $15.00. I acquired several other stocks during that period, all of which performed well, but I felt that, perhaps, Disney had lost its way. Happy with how my investments were performing, I eventually forgot about Disney. Of course, I am speaking only in terms of investing. It’s impossible to forget about the vast Disney influence on our culture.
I could kick myself for not buying Disney.
Disney shares closed yesterday at 94.10. They opened in New York this morning at 99.44, reaching a high of 101.94 before closing at 101.28. What was I thinking back then? That Disney would go bust? That Mickey would die? That Disney management had become Goofy? That Michael Eisner’s salary would drain the coffers at the Magic Kingdom?
Well, Michael is gone and Mickey is very much alive. Bob Iger has led Disney to a quarter that beat EPS estimates of $1.07 per share by $0.20, with a year-on-year EPS increase from $1.03 to $.27. All five divisions of the entertainment giant achieved healthy gains at the bottom line. The 30.68% growth in Disney shares over the past 12 months has outperformed the overall S&P 500.
Disney’s “Frozen” Asset
Usually when an asset is frozen, a company is in deep doo-doo. But this is a different situation. Disney’s “Frozen” is an asset that has been key to the company’s recent success. The Consumer Products segment operating income increased by a whopping 46% as kids around the world asked Santa and begged their parents, who were apparently listening, for Anna and Olaf dolls and other “Frozen” memorabilia. The NPD Group identified the “Frozen” collection as the top-selling toy brand for 2014. Mickey’s world may be turning into Olaf’s world. Disney CFO Jay Rasulo confirmed that “Frozen” products were the company’s biggest driver of that 46% increase. That sounds like something a grocery chain might say.
The staying power of the Disney kingdom is still magical and it probably will be as long as there are kids. Which is something I wish I had considered as an investor 14 years ago.
