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What's Wrong With Walt Disney's Stock Today?

http://www.fool.com/investing/general/2013/08/07/whats-wrong-with-walt-disneys-stock-today.aspx

Anders Bylund
August 7, 2013

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Walt Disney (NYSE: DIS) investors always knew the second quarter of 2013 had some huge shoes to fill. Given the high stakes, the stock's 1.7% drop today looks like a perfectly acceptable adjustment.

The House of Mouse faced 2012's record-breaking mega-hit The Avengers in this quarter's year-over-year comparisons. The Marvel superhero tentpole scored $620 million in domestic box-office receipts and $1.5 billion worldwide. It's the third-most successful movie of all time, behind only James Cameron's Titanic and Avatar.

That's a heavy headwind for this quarter. Disney's cinematic adventures account for a large percentage of its total revenue, and they also fuel future results by tapping into DVD and Blu-ray releases, TV and online runs, theme park tie-ins, lunchboxes, and Hulk-styled underwear.

But Disney had the perfect follow-up in Avengers satellite feature Iron Man 3. The company paid top dollar for superstar Robert Downey Jr. and his supporting cast, and it was well worth the investment. Iron Man 3 collected $1.2 billion in global sales, and about $400 million dropped straight down to the bottom line.

In the end, Disney reported 2% higher earnings year over year on 4% higher sales. Studio revenue slipped 2%, allowing parks and cable network operations to drive some total growth. These results were roughly in line with analyst estimates.

Disney's drop is the second-largest swoon on the Dow Jones Industrial Average (DJINDICES: ^DJI) today. But Disney has crushed its Dow peers in 2013 with a 32% return so far,