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Can Disney’s Impressive Movie Line-up Drive Stock Higher?


In the last couple of years, The Walt Disney Company DIS has struck gold with almost every movie release. Analysts believe that Disney will continue to taste success at box office as the company is slated to release 21 films in the coming two years. Notably, movies will be released under Pixar, Marvel, Lucasfilm animated and live-action banner.

Live-Action Films

At Disney’s D23 event, the company unveiled its movie slate, which includes live-action films like “A Wrinkle in Time”, "The Lion King", "Aladdin", "Dumbo”. “A Wrinkle in Time” will hit the theatres on Mar 9, 2018, while "Dumbo” will be released on Mar 29, 2019. "The Lion King" is scheduled for Jul 19, 2019 release. The company also revealed that Hollywood star Will Smith will be voicing the ever lovable Genie in "Aladdin".

In the past, the company’s strategy of rehashing old animated movies into live-action remakes has paid-off well. The company’s recent live-action movie “Beauty and the Beast” collected more than $1.2 billion at the box office. Further, its earlier live-action remakes like “The Jungle Book”, “Cinderella”, “Maleficent” and “Alice in Wonderland” had garnered $967 million, $544 million, $759 million and more than $1 billion, respectively, worldwide.

Other Movies

Apart from the aforementioned, live-action films, Disney in the coming two years will release "The Nutcracker and the Four Realms", "Mary Poppins Returns", "Star Wars: The Last Jedi" and "Avengers: Infinity War".

The success of the movies will ensure great business for the company’s Consumer Products division as demand for merchandise associated with successful movies usually skyrockets as seen in case of Frozen.

We note that fiscal 2016 has been a magnificent year for the company’s movie business. Four of its releases, namely, “Star Wars: The Force Awakens”, “Captain America: Civil War”, “Finding Dory” and “Zootopia” surpassed the $1 billion mark, each. The company has not disappointed movie lovers far in 2017 with hits like “Beauty and the Beast” and “Pirates of the Caribbean: Dead Men Tell No Tales”.

Stock Performance

Despite the fabulous run of its movies, the Zacks Rank #4 (Sell) company’s shares have declined 7.9% in the past three months, in comparison with the Zacks categorized Media Conglomerates industry’s fall of 6.7%. Meanwhile, shares of Comcast Corporation CMCSA and Time Warner Inc. TWX have gained 4.3% and 0.1%, respectively.

The success of movie business is crucial for Disney as the loss of subscribers at ESPN has been a major concern for investors. Disney’s primary cash cow, ESPN, has been under immense pressure as the Pay-TV landscape continues to change owing to migration of subscribers to online TV. Further, the recent news of the decline in rating at the company’s youth-focused Disney Channel may hurt the stock more.

Key Pick

A better-ranked stock worth considering in the media space include Viacom, Inc. VIAB, which currently sports a Zacks Rank #1 (Strong Buy). The company’s earnings have surpassed the Zacks Consensus estimate in the trailing four quarters with an average beat of 17.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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