Walt Disney Co. Stock in 6 Charts

By Markets Fool.com

Image source: Disney.

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You're almost certainly familiar with Walt Disney(NYSE: DIS)and at least some of its entertainment offerings across its storied and diverse empire. But if you'd like to better familiarize yourself with this iconic company as a potential stock investment, these seven charts should help.

Standout stock performance

The first thing a potential investor in Disney stock should know is how the stock has performed relative to the overall market. While past performance isn't indicative of future performance, it does often reflect on management's ability to execute and develop winning strategies.

It's best to also include a peer group in the comparison. Disney doesn't have any close peers, because it operates in several major industries -- various media markets, including TV and cable; theme parks; movie production; and consumer goods. However, it does face many competitors across these businesses:Time Warner, Twenty-First Century Fox, Viacom, and Comcastamong others.

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Data by YCharts.

Disney's five-year total return through Sept. 1 of nearly 205% easily outperformed the broad market and most of its peer group. If not for the large sell-off last fall, Disney would have led the entire pack, and it's worth noting that the company has solidly outperformed Comcast over the past decade.

Disney's empire broken down by segment

Investors should also have a good grasp of the relative sizes and growth dynamics of Disney's various business units. Here's how things stack up for the first three quarters of fiscal 2016.

Metric

Media Networks

Parks and Resorts

Studio Entertainment

Consumer Goods and Interactive Media

Percentage of Total Fiscal 2016 Revenue

42.4% 29.6% 18.0% 10.0%

YoY Revenue Growth

3.4% 6.7% 37.7% 2.7%

Percentage of Total Fiscal 2016 Operating Income

48.5% 20.7% 18.5% 12.3%

YoY Operating Income Growth

1.8% 13.3% 60.9% 7.2%

Data source: Disney. YoY = year over year.

Some takeaways from the chart:

  • Media networks is the largest segment, accounting for about 42% of revenue and 48% of operating income.
  • Studio entertainment is the growth juggernaut for this period, and its operating margin has considerably expanded as well.

Cord-cutting concerns surface in 2015

Despite Disney turning in solid fiscal third-quarter 2015 results last August, investors sent shares tumbling more than 9% the next day, driven by comments from CEO Bob Iger regarding a "modest decline" in the number of ESPN subscribers and its negative impact on profit growth. The lucrative cable sports network has been shedding subscribers as people cancel or slim down their television bundles in favor of digital streaming offerings.

Investors' concerns are legitimate, given media networks account for nearly half of Disney's operating income, but they've been overblown, in my opinion. Since the initial sell-off, Disney has posted quarterly results ranging from good to sensational, yet the market has pushed shares down more than 20% from their all-time high.

Here's a look at ESPN's declining subscriber numbers:

Metric End of Fiscal 2013 End of Fiscal 2014 End of Fiscal 2015 End of May 2016
# of ESPN subscribers 99 million 95 million 92 million 89.5 million

Data sources: Disney and Nielsen.

If the current trend continues, ESPN will have approximately 87 million to 88 million subscribers by the end of fiscal 2016, translating to an 11% to 12% decline in just three years.

Disney is not sitting still while the media market evolves. The company has had success in getting ESPN included in several distributors' over-the-top "skinny bundles". Moreover, it made a huge offensive move last month when it bought a 33% stake in BAMTech, a leading video streaming provider, for $1 billion. Disney, which has the future rights to buy a controlling stake in BAMTech, plans to launch adirect-to-consumer ESPN-branded subscription video streaming service at the end of this year. The BAMTech stake will allow the company to deliver its content directly to consumers, while profiting from the growth of streaming in general, since BAMTech has a bevy of A-List clients.

Film segment is firing on all cylinders

The studio entertainment segment started off the fiscal year with the mid-December release of Star Wars: The Force Awakens. The blockbuster movie has generated nearly $2.1 billion in box office receipts, making it the third highest-grossing movie of all time. Momentum continued into 2016 as you can see in the list of the year's top-grossing movies worldwide:

Rank

Movie

Distributor

Total Gross

1

Captain America: Civil War

Disney

$1,152,500,000

2

Zootopia

Disney

$1,023,200,000

3

The Jungle Book (2016)

Disney

$961,300,000

4

Finding Dory

Disney

$931,000,000

5

Batman v. Superman: Dawn of Justice

Warner Brothers

$872,700,000

Data source:Box Office Mojo.Data as of Sept. 1.

And this box office domination is likely to continue. Disney is kicking off fiscal 2017 just as it did the previous year, by releasing a Star Warsflick during the holiday season. The spin-off film, Rogue One: A Star Wars Story,is set to open domestically on Dec. 16.Rogue One will be followed by a powerful multi-year movie lineup.

Shanghai Disney's massive potential

The grand opening on June 16 of Shanghai Disney -- the company's first theme park in mainland China -- was spectacular, by all accounts. During the third quarter conference call, Iger shared some highlights for the new $5.5 billion development:

Metric Number of Park Visitors Since Opening* Hotel Occupancy Rate Since Opening* Shanghai Residents that Plan to Visit Park
Result 1 million plus 95% 70% (about 17 million)

Data source: Disney. *Numbers as of Q3 conference call on Aug. 9.

The park is drawing visitors from outside of the Shanghai area, Iger said during the call, as Shanghai is a vacation destination for people throughout China and international tourists.

As the most populous country in the world, with a rapidly growing middle class -- a dynamic that's expected to continue well into the future -- Shanghai Disney should prove to be a major boost for the company going forward.

The valuation cherry on top

Despite strong performance over the past year, valuations across the board have come down for the company (the price-earnings-growth (PEG) ratio was 1.025 a year ago, which doesn't show in the chart).

Data by YCharts.

The current valuations are quite reasonable for a company of Disney's caliber. As it stands, the market is giving long-term investors an attractive buying opportunity.

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Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Time Warner and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.