Disney Stock Analysis: Box Office Success Of Disney Movies Has Trickle-down Benefits

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Disney Stock Analysis


  • This year has been kind to Disney-made movies. Disney has three billion-dollar grossing movies, Zootopia, Captain America: Civil War, and Finding Dory.
  • Strange is another blockbuster hit judging by its global weekend gross of $325 million.
  • Disney’s stock should trade higher when investors appreciate that it now owns the top four biggest grossing movies this year.
  • Successful movies has trickle-down benefits. Licensing streaming and TV rights of hit movies also benefits the Consumer Goods and Media Networks divisions of Disney.
  • Disney’s stock has positive short and near-term algorithmic forecasts.

Disney’s (DIS) stock price has dropped more than 10.5% over the last six months. This is hard to swallow because 2016 has been very good for Disney’s movies. In the U.S. alone, Disney movies grossed more than $2.23 billion in theater sales. Disney’s stock should be up 10% when we appreciate that Disney’s Captain America: Civil War, Finding Dory, Zootopia, and The Jungle Book are the world’s top-grossing movies this year.

Disney Stock Analysis


(Source: the-numbers.com)


Investors should never forget that there are derivative benefits from Disney’s top-grossing movies. It is not only the Studio Entertainment segment that is benefiting from movie ticket sales. There are also potential sales from movie-themed goods, licensing rights from cable TV and streaming TV operators.

It is wrong to think that only the Studio Entertainment segment is benefiting from hit movies. Yes, Studio Entertainment is small compared to other business divisions of Disney. However, the movies from Studio Entertainment is a good barometer to measure the future of Disney’s top line growth.

Disney Stock Analysis

(Source: Statista)

Disney’s economic benefits from hit movies are far greater if we include the money from licensing Finding Dory or Captain America Intellectual Property assets to firms who make clothes, stickers, toys, and other consumer items. In other words, Disney’s Consumer Goods business segment benefits whenever there’s a hit Marvel movie.

A mother may only pay $8 to watch Finding Dory. However, her kids could also demand she buys $80 more worth of Finding Dory toys and clothes. After six months, she will also need to buy a DVD or Blu-Ray copy of Finding Dory to keep her children happy.

The movies released this year, blockbuster hit or not, also have long-term monetary potential from licensing to pay-TV cable operators or streaming services like Netflix (NFLX) and HBO. The more successful movies like Finding Dory definitely will command higher licensing fees in third-party broadcasting. The more hit movies that Disney/Buena Vista churns out, the better it will be for Disney’s bottom line.

The Disney Empire Has A Cult Following

I hope Marvel’s latest blockbuster hit Dr. Strange reminds investors just how great Disney is as a long-term investment. The estimated global weekend gross of Dr. Strange is $325 million. I bet that before 2016 ends, Dr. Strange will gross more than $900 million.

My point is that Disney has reliable franchises like Marvel heroes and Star Wars to keep releasing billion-dollar-grossing movies for many years to come. Cult following of Marvel Heroes, Nemo, Star Wars, and other Disney characters will keep on watching movies about them. Fans will buy new t-shirts, toys, and other products that remind them of their favorite heroes and Disney characters.

Disney’s Parks & Recreations division are also likely receiving more paying visitors whenever there’s a hit movie. Hit movies raises global awareness about Disney’s library of heroes and loveable characters in kids and adult alike.

Hit movie franchises like Marvel’s Iron Man has compelled Disney to build the Iron Man Experience Ride in Hong Kong Disneyland. There’s also the talk of Disney building a Marvel Super Hero Island theme park in Orlando, Florida. The billions of dollars that people around the world spent on watching Marvel movies explains why there’s money to be made in Marvel-themed Disneyland attractions.

Box Office History for Marvel Cinematic Universe Movies



(Source: the-numbers.com)

In short, hit movies from Disney’s Studio Entertainment segment also improves the revenue streams of the Media Networks, Consumer Goods, and Parks and Resorts segments. Disney Interactive also receives more licensing money in video games whenever there’s a hit movie.


I strongly endorse DIS as a Buy for value investors. Take advantage of the lower price of DIS to load up on this dividend-paying company. As long as people around the world keep watching franchise movies from Disney, the Mickey Mouse empire will continue to prosper. The global hype over hit Disney movies like Dr. Strange affirmed my investment thesis for Disney.

Content is king and Disney definitely has the biggest library of content from where unlimited movies, games, goods, TV shows, learning materials, and marketing copies could be created. It is my fearless forecast that a content king like Disney is a much better long-term investment than Netflix (NFLX). Yes, Netflix’s stock performance/valuation is very high compared to Disney. However, Netflix doesn’t have cult heroes like those Marvel and Finding Nemo franchises that Disney has.

In the long run, content owners of popular entertainment icons like Star Wars and Marvel will generate more revenue and income than content-licensing firms like Netflix.

My buy thesis for DIS is also supported by the positive near and medium-term algorithmic forecasts from I Know First.


I Know First Past Success With DIS

I Know First has been bullish on DIS in past forecasts. On October 14, 2014, an I Know First analyst had written a bullish article on DIS in accordance with our state of the art of the algorithm. During the time span of 3 months forecast, DIS rose by 13.72%

Income Investing Strategy

The above forecast displays DIS as one of the top performing stocks with a return of 13.72% in a 3 months time span between October 14, 2014 to January 14, 2015.

This forecasts were sent out to current I Know first subscribers on October 14, 2015. To subscribe now click here.