A Look Back at Walt Disney's Performance in 2013

Throughout 2013, shares of Walt Disney (NYSE: DIS  ) performed very well. Not only did they outpace the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500, but they also look as if they'll end the year as one of the top five best performing Dow components. Here's a look at the stock's performance year to date, compared with that of the major indexes' results:

DIS Chart

DIS data by YCharts

The stock didn't pull away from the major indexes until the start of the second quarter. That's when we heard that Disney was preparing for layoffs at some of its film studios, including Lucasfilm, the company behind Star Wars that Disney had just acquired a few months earlier. At the time of the purchase, some investors questioned how much would change at Lucasfilm and whether Disney would force the issue on costs and other key business decisions. The layoff announcement answered those questions and acted as a catalyst to push the stock price higher.  

Around the same time, Iron Man 3 was being released in theaters. The film raked in $1.3 billion worldwide, while The Lone Ranger, released a month after Iron Man, also managed to make $900 million around the globe. Even though The Lone Ranger was considered a flop, both films combined gave the company a real revenue boost.  

They're also an example of the type of franchise-building that Disney is so good at. Films yield action figures and other merchandise, TV shows, short films, sequels, and sometimes even theme parks. Disney wrings out every last dollar it can and then moves right on to the next money-making idea, starting the cycle anew.

Looking ahead
I would expect that the months, quarters, and years ahead will give us more of what we've seen recently from Disney. The company is a well-oiled machine that really knows how to operate. The purchases of Lucasfilm, Marvel Comics, and even the Pixar studio all point to the company's desire for more content creation so that it can churn films out and roll those characters through the money-making cycle. Disney shareholders should hold on for the long road upward.

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  • Report this Comment On December 26, 2013, at 3:01 AM, esxokm wrote:

    Matt,

    Great article. I too am bullish on Disney stock. I don't think the company is perfect, but its unique brand power makes this investment idea attractive; an investor can definitely feel comfortable while owning shares.

    One thing: in your article, I see that you credit "The Lone Ranger" with a $900 million box-office take. At a box-office site, I see $260 million for a worldwide take. Are you including home video and other revenue streams, or is the lower number I am l looking at incorrect? Thanks.

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