NEW YORK: Disney is a good buy. That’s the assessment from John Dobosz at Forbes, who made the company his Stock of the Week pick.
“The Walt Disney Co. (NYSE: DIS) has been in the business of providing imaginative escapist entertainment since its founding in 1923 by Walt and Roy Disney,” Dobosz wrote. “Shares of Disney have had their rough times and, in fact, never regained old highs hit back in 2000,” when the stock peaked at more than $43 per share.
“Outside of energy, it’s hard to get any more cyclical than the media and entertainment businesses, which are built on discretionary consumer spending that tends to evaporate during economic downturns,” Dobosz said, noting that investors have slammed Disney, sending the stock down 55 percent since last September.
Shares of Disney were trading late today at around $19.80, up from a year-to-date low of $15.14 reached in March. Even with the rebound, Dobosz said Disney remained a good buy.
Disney posted fiscal 1Q09 revenues in February of nearly $9.6 billion, down 8 percent from 1Q08. Net income for the quarter that ended Dec. 27, 2008 was $845 million, down 32 percent.
Revenue at Disney's ABC network was down 14 percent for the quarter to more than $1.45 billion. Operating income fell 60 percent to $138 million this year on lower ad revenue due to ratings more than spending, the Mouse said.
The company’s theme parks also were hit by the recession. 1Q09 revenues were $2.67 billion, down 4 percent. Attendance fell 5 percent and continues to decline. The company last week said it would cut a total of 1,900 theme park jobs.
