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Instant Analysis: Investors Yawn As Disney Sets Another Record

By Tim Beyers – Jul 19, 2016 at 9:21AM

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"Finding Dory" sets a new mark for U.S. grosses from an animated film just one week after achieving another major box-office milestone.

Dory with her childhood best friend, Destiny the whale shark. Image source: Disney Pixar.

Barely a week after Walt Disney's (DIS 0.90%) studios earned the honor of being the fastest in history to earn $5 billion at the worldwide box office, Finding Dory set the all-time record for U.S. grosses for an animated movie.

Less than five weeks into its release, Finding Dory came into Monday having earned $445.5 million at the U.S. box office. That tops DreamWorks Animation's Shrek 2, which moves to second at $441.2 million in U.S. earnings. Disney's The Lion King ranks third on the all-time list, with $422.8 million in domestic grosses.

As impressive as Dory's performance has been, it's no outlier. Disney brands have been winning at the box office all year. According to Box Office Mojo, films distributed by the House of Mouse have accounted for 31.3% of domestic receipts through July 17. And that's just for 10 films. Second-ranked Twenty-First Century Fox (FOXA) has distributed 14 movies, accounting for 16.5% of receipts, while third-place Time Warner (TWX) has distributed 22 movies, accounting for an even 14% of the U.S. box office.

Does it matter?

Investors should think more of this. Instead, Disney stock is down about 4.6% year to date. The benchmark S&P 500 index is up more than 6% over the same period, which seems grossly unfair.

Consider recent history. Last year, operating profit for Disney's Studio Entertainment business zoomed 45.1% on a 40.9% jump in domestic box-office receipts. As of this writing, Box Office Mojo has Disney tracking 63.5% ahead of its 2015 total.

With Marvel's latest, Doctor Strange, due in November and Rogue One: A Star Wars Story due just a month later, it's reasonable to think the Mouse can keep up with history and grow its 2016 Studio Entertainment operating income by 60% or more -- just the sort of news that should be pushing Disney stock higher than it trades for today.

Tim Beyers owns shares of Time Warner and Walt Disney. and has the following options: long January 2017 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Time Warner and Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Walt Disney Stock Quote
Walt Disney
$93.38 (0.90%) $0.83
Time Warner Inc. Stock Quote
Time Warner Inc.
DreamWorks Animation SKG Inc. Stock Quote
DreamWorks Animation SKG Inc.
Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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