How High Can Disney Fly?

Shares of Disney (NYSE: DIS  ) hit a 52-week high yesterday and are flirting with a new high again today. Let's look at how it got here and whether clear skies are ahead.

How it got here
Mickey's house appears to be firing on all cylinders lately, driven most recently by The Avengers' blockbuster weekend. But The Avengers hasn't even had an impact on the bottom line yet where results have been impressive.

In the last quarter, Disney reported revenue of $9.63 billion, a 6.1% increase from a year ago, and $0.58 in earnings per share. Disney has made a habit of beating estimates, and this quarter was no exception.

While this is certainly welcome news, the stock is up only 4.5% in the last year, not exactly earth-shattering returns. Still, Disney has outperformed its media rivals Viacom (Nasdaq: VIA  ) and Time Warner (NYSE: TWX  ) over that time.

DIS Chart

DIS data by YCharts

Disney is more expensive than rivals on a price/sales basis but has outpaced them in growth. Here are three relevant valuation metrics.

Company

Price/Sales

Return on Equity

Quarterly Revenue Growth

Forward P/E

Disney 2.0 14.1% 6.1% 13.2
Time Warner 1.2 9.1% 4.4% 9.9
Viacom 1.8 27.3% 2.0% N/A

Source: Yahoo! Finance.

What's next?
After a giant flop with John Carter, Disney is back on top of the movie business. Customers seem to be willing to come out and spend at the box office after strong showings from The Avengers and The Hunger Games from Lions Gate Entertainment (NYSE: LGF  ) .

The CAPS community thinks Disney will continue to outperform, giving the company a top-notch five-star rating. I agree that the company will outperform the market with slow and steady earnings growth. The company's 1.3% dividend yield and its 13.2 forward P/E ratio are attractive to me right now, and I will keep my outperform CAPScall on the stock.

Interested in reading more about Disney? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium manages an account that owns shares of Disney. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services have recommended buying shares of Walt Disney. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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