2 Things Walt Disney Co Investors Will Be Watching in 2015
The Walt Disney Company has continued to bring the magic in 2014, not just in creating great experiences for Disney fans, but also in creating great returns for Disney shareholders. It will take a lot more magic for Disney to be able to reproduce another year like it had this year, and yet, the company still looks like a growth company when you consider how 2015 is shaping up.
With Disney's different segments, it really operates as five separate entities, all tied together through Disney characters but with very different operations. Media has been the largest segment in this House of Mouse for some time, reporting at nearly 50% of Disney's total income in the last quarter. The media segment includes TV networks such as the Disney Channel and ESPN.
But while media is a major part of the company, and its revenue growth did contribute a major part to Disney's overall great performance so far this year, the segments to watch in 2015 are actually Theme Parks and Studio Entertainment.
Source: Disney's 2014 Q3 Earnings
The reason these two segments are going to help to spur on profitability for the company is that, even though the segments themselves are only about 31% and 15% of the company's total revenue, respectively, they are the fastest-growing segments and the ones with the most potential in 2015, and 2016, to produce even higher growth rates than the company itself, almost like smaller "growth" companies themselves. Let's take a look at two areas for investors to watch in 2015.
Disney has many big projects in the works, and CEO Bob Iger has said the company will continue to increase its film output in coming years. In the recent earnings report, he said Disney plans to release 21 films in the next three years, compared to 13 in the past three. The two movie empires to watch in 2015 are the Marvel franchise and the Star Wars saga.
The Marvel franchise, which has been owned by Disney since 2009, has been a major part of Disney's recent movie production success with blockbuster hits like Guardians of the Galaxy. Overall, these Marvel character movies have done substantially better than competing franchises like Lions Gate's Divergent series or Hunger Games series.
2015 should prove another big year for the Marvel franchise with new movies in the empire like Avengers: Age of Ultron and Antman. These Marvel movies look to continue to drive up Disney revenue in its studio entertainment segment and help prepare the company for more Marvel success in 2016 and 2017.
Disney acquired Lucasfilm for $4.05 billion a couple of years ago, and has only just released more news of its coming Star Wars movie during the past couple of months. The company has said that Star Wars VII: The Force Awakens, set to be released in 2015, will be set 30 years after the last of the original series, Star Wars VI: Return of the Jedi, which was released in 1983. The film is intended to be released on Dec. 18, 2015.
While we won't see revenues from this movie during 2015, since it's being released so close to the end of the year, still expect share price movements as more news is released about the film, fans start to drum up interest, and investors start to make bets on how successful this movie will be for Disney.
Disney has had record attendance at its worldwide theme parks so far in 2014. Disney already ranks for most spots in the world's top 10 resorts by most estimates, and already has multiple parks in Asia with its Tokyo and Hong Kong resorts. Disney's theme park attendance is set for massive growth in 2015, especially when Disney opens a resort in mainland China.
This $4.4 billion resort will be about three times the size of Hong Kong Disneyland. While it will keep the many familiar Disney World elements, it will also have distinct Chinese themes -- includingthe "Garden of the Twelve Friends," containing 12 large mosaic murals depicting the 12 signs of the Chinese zodiac using popular Disney characters -- and many new attractions unique to this resort, such as the recently announced massive Toy Story-themed hotel.
Because this theme park will be opened toward the end of 2105, don't expect actual revenue advances from this park to be a major boost in 2015 earnings, though they likely will be in 2016. However, for this next year, still expect shares to move as completion of the park gets closer and people start to get more and more excited about what this theme park opening will mean for their long-term investment in Disney.
The article 2 Things Walt Disney Co Investors Will Be Watching in 2015 originally appeared on Fool.com.
Bradley Seth McNew owns shares of Walt Disney. The Motley Fool recommends Lions Gate Entertainment and Walt Disney. The Motley Fool owns shares of 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.
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