Disney (NYSE:DIS) is an entertainment powerhouse building profits from the movie theater out. Its stock has risen 17% since the beginning of the year and you might be wondering whether now is a good time to buy. Read on to see what three Motley Fool contributors have to say.
Anders Bylund: Disney has a proven knack for making the most of big content acquisitions. I mean, it's almost unbelievable. And the market has yet to absorb the upcoming impact of the latest cathartic deal.
Disney spent $7.4 billion on Pixar in 2006; $5.2 billion in global ticket sales later, Pixar leaders Ed Catmull and John Lasseter also run Disney's other animation studios. For example, Lasseter was crucial to the billion-dollar success of Frozen.
Marvel cost $4.6 billion in 2009. Since then, the studio has generated $9.6 billion in worldwide box office figures, including $4.7 billion for Marvel movies also distributed by Disney. Both The Avengers and Iron Man 3 broke the billion-dollar barrier.
These box office figures don't include DVD and Blu-ray sales. Nor do they account for licensed t-shirts, pajamas, action figures, or lunch boxes. Moreover, Disney keeps integrating Pixar and Marvel characters, and their stories, into cruise experiences and theme park rides.
This crucial content makes plenty of money, but is really just the starting point for everything that Disney does.
These are game-changing, transformative deals. They move Disney's stock. Over the last year, Frozen and the Marvel portfolio helped Disney investors double the S&P 500's returns.
The $4 billion Lucasfilm buyout will also pay huge dividends, as Disney unfolds the epic Star Wars universe and the Indiana Jones saga.
Don't be fooled by recent stock gains: Mr. Market is ignoring this near-certain hit factory so far. The market-crushing Disney returns you see today belong mostly in the Marvel column -- with an assist from Anna and Elsa.
Rick Munarriz: Disney is a compelling buy because no one knows how to milk a successful entertainment property as well as the family entertainment giant. This is why Disney hasn't been afraid to cut big checks. It has spent billions on Pixar, Marvel, and more recently Lucasfilm. Those deals have justified or will eventually justify their 10-figure purchase prices. However, Disney is still more than capable of putting out a homegrown hit every so often.
Let's take Frozen. It's been 10 months since Disney put out the full-length animated feature. It proved irresistibly magnetic to audiences wooed by its catchy songs, universal humor, and tale of female empowerment. It went on to generate nearly $1.3 billion in ticket sales worldwide, making it the fifth highest grossing movie of all time and the top dog in full-length animation.
Knowing Disney you know that the victory lap doesn't end there. Beyond the obvious Frozen merchandise and brisk DVD and Blu-ray sales earlier this year we're seeing themed attractions popping up at its theme parks. Disney's Hollywood Studios in Florida has taken things to a new level this summer with a daily parade, singalong, snow-play area, and nightly fireworks show. Frozen has also become the fitting theme of the current Disney on Ice show that's touring across the country, and a Broadway show is in development. Later this month the show's characters will find their way on to ABC's Once Upon a Time and a new animated short -- Frozen Forever -- will play ahead of a Disney animated feature.
Until Disney stops putting out hits or loses it magic touch in monetizing them effectively it's a stock worth owning and holding. Contrary to Frozen's most popular tune, you don't want to "let it go."
Steve Symington: I think now's a great time to buy Disney. Its studio entertainment segment, in particular, is setting the stage for impressive results going forward. Marvel's Guardians of the Galaxy, for example, is the United States' top film of 2014 so far, and as of this writing had grossed nearly $600 million worldwide since the beginning of last month. What's more, Guardians hasn't even been released in China yet, where Captain America: The Winter Soldier added an impressive $115.6 million earlier this year.
Next year, Disney is also putting its $4 billion acquisition of Lucasfilm to work with the widely anticipated December 2015 debut of Star Wars: Episode VII. But not before Avengers: Age of Ultron tries to improve on the $1.5 billion worldwide haul of its 2012 predecessor next May. Then next June, Disney Pixar will offer its first new film in two years with Inside Out, followed by The Good Dinosaur that November. Combine this slate of enviable potential blockbusters with the resulting ripple effects to fuel Disney's other segments -- notably consumer products, parks & resorts, and interactive through its Disney Infinity game -- and Disney looks more like an unstoppable money-making machine than ever before.
Anders Bylund owns shares of Walt Disney. Rick Munarriz owns shares of Walt Disney. Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. 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.