Tag Archives: DIS

2 Tech Stocks Up 100% Over the Past Year

The stock market has been a bit volatile this year, but there are some sectors that are still experiencing significant share price gains. For example, the Nasdaq 100 Technology Sectoris up about 22% over the past 12 months.Those gains are pretty impressive, but a handful of tech stocks, including Square (NYSE:SQ) and Netflix(NASDAQ:NFLX), have seen their share price jump about five times as much.

With company returns as high as 100% over the past year, it’s worth taking a closer look at what Square and Netflix are doing so well, if they can keep the momentum going, and one hurdle each of them faces that investors should be on the lookout for.

Man sitting at computer looking at charts.

Image source: Getty Images.

Square: Up 176% over the past 12 months

Square supplies point-of-sale (POS) terminals to merchants, offers mobile payment services, has a popular peer-to-peer payment app called Square Cash, provides small business loans through Square Capital, and has its own online food ordering business, called Caviar.

Square’s share price has seen astronomical gains over the past 12 months as the company has grown is sales and client base. Net revenue was up 36% year over year in the fourth quarter, and the company’s gross payment volume (the total amount processed through its payment systems) grew by 31% to $17.9 billion. Investors have also been impressed with the company’s ability to increase its EBITDA, which jumped 38% in Q4 to $41 million and 33% year over year to $36 million in Q1.

Square makes the vast majority of its revenue from payment transactions on its platform, but the company’s other businesses offer additional opportunities as well. For example, its mobile payment Cash app now has 7 million monthly active users. Square is also growing its subscription and services revenue, which was up 95% in 2017; the segment now accounts for 11% of Square’s total sales (up from just 8% in 2016).

So can Square keep the momentum going? The company has a few things working in its favor, including the fact that it’s adding larger customers on its platform. Companies selling $125,000 or less per year accounted for 53% of the company’s gross payment volume (GPV) in the fourth quarter of 2017. Customers spending $500,000 or more annually make up 20% of GPV, up from 13% two years ago. Square is also doing a good job building out a payment ecosystem by selling everything from the hardware (payment terminals) to point-of-sale software, its mobile Cash app, lending services, and even its food delivery business.

But Square isn’t without its risks, of course. Investors should keep a close eye on what some of the company’s competitors are doing with mobile payments and point-of-sale services. Both Intuit and PayPal offer similar services. Square is building a strong brand right now, but it doesn’t have an economic moat around its business yet. For many merchants, especially smaller ones, the switching costs are pretty low for them to jump to another payment processor. That’s not to say Square’s a bad investment, but investors should know that the company still faces lots of competition in this growing market.

Netflix: Up 111% over the past 12 months

Netflix has built itself into a video-streaming powerhouse and now boasts more than 125 million total members.The company is experiencing substantial user growth as it expands into new international markets. Netflix’s non-U.S. streaming subscribers now account for 54% of the company’s total paid subscribers, and in the first quarter of 2018 the company increased paid international subscribers by 42% year over year.

Investors have also been happy to see the company’s sales and earnings continue to spike. Revenue was up more than 40% in the most recent quarter to $3.7 billion, and diluted earnings per share of $0.64 were up 60% from the year-ago quarter, which far outpaced any of the company’s quarterly earnings in 2017. Net income also increased about 63% year over year to $290 million.

Netflix is facing an increase in competition on several fronts, most recently from Disney’s (NYSE:DIS) announcement that it will bring its own content streaming service to market sometime this year. Disney has a war chest of old movies and shows, along with owning massive content franchises like Star Wars and Marvel, which could make Disney’s service a strong contender.

But Netflix will likely be able to fend off Disney, and other players including Amazon and Hulu, because of its treasure trove of user data. For years, Netflix has been collecting users’ viewing habits (everything from what we watch and when we watch it) so it can create original content and purchase programming it knows its members will love. Tapping into this data allows Netflix to create a network effect that keeps its users watching more Netflix content, and thus supplying it with more viewing data to make future shows.

Netflix is spending a lot of money — between $7.5 billion and $8 billion in 2018 — on content, and that’s up from $6 billion last year. Some of this spending comes from Netflix shelling out cash to create shows that will appeal to viewers in local international markets. The company’s subscriber growth shows that spending all of this cash is paying off, but investors should keep an eye on these expenses to see if they continue to climb. At some point, the company should be able to curb spending a bit, or at least let it stabilize, one it’s built up enough original content. But Netflix’s current collection of original content, and its ability to know what its users want to watch, should help it continue dominating the content streaming space for years to come.

Keep this in mind

Investors should remember that just because Netflix and Square have performed well over the past year doesn’t mean they’ll do well in the future. If you’re interested in investing in these two companies, make sure you’re not doing it just because these stocks are on a tear right now.

The Walt Disney (DIS) Announces Quarterly Earnings Results, Beats Expectations By $0.14 EPS

The Walt Disney (NYSE:DIS) issued its quarterly earnings data on Tuesday. The entertainment giant reported $1.84 earnings per share (EPS) for the quarter, beating the consensus estimate of $1.70 by $0.14, Bloomberg Earnings reports. The firm had revenue of $14.55 billion for the quarter, compared to analyst estimates of $14.11 billion. The Walt Disney had a net margin of 19.61% and a return on equity of 20.44%. The Walt Disney’s revenue was up 9.1% on a year-over-year basis. During the same period in the previous year, the firm earned $1.50 EPS.

Shares of The Walt Disney stock traded down $0.69 on Tuesday, reaching $101.79. 14,229,528 shares of the company were exchanged, compared to its average volume of 8,222,350. The Walt Disney has a 1-year low of $96.20 and a 1-year high of $113.19. The company has a market cap of $152.10 billion, a PE ratio of 17.86, a P/E/G ratio of 1.45 and a beta of 1.29. The company has a debt-to-equity ratio of 0.43, a quick ratio of 0.80 and a current ratio of 0.87.

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In related news, Director Aylwin B. Lewis sold 1,797 shares of the company’s stock in a transaction that occurred on Monday, February 26th. The stock was sold at an average price of $108.39, for a total value of $194,776.83. Following the completion of the transaction, the director now directly owns 85,636 shares of the company’s stock, valued at $9,282,086.04. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. Insiders own 0.38% of the company’s stock.

An institutional investor recently bought a new position in The Walt Disney stock. HC Financial Advisors Inc. purchased a new stake in The Walt Disney Company (NYSE:DIS) in the fourth quarter, according to its most recent disclosure with the Securities & Exchange Commission. The institutional investor purchased 26,012 shares of the entertainment giant’s stock, valued at approximately $2,797,000. The Walt Disney makes up approximately 2.8% of HC Financial Advisors Inc.’s investment portfolio, making the stock its 7th biggest holding. 62.74% of the stock is currently owned by hedge funds and other institutional investors.

DIS has been the topic of a number of recent research reports. Macquarie set a $125.00 price target on shares of The Walt Disney and gave the stock a “buy” rating in a research note on Tuesday, February 6th. Vetr upgraded shares of The Walt Disney from a “hold” rating to a “buy” rating and set a $115.53 price target on the stock in a research note on Monday, January 22nd. Bank of America reiterated a “buy” rating and set a $144.00 price target (up from $130.00) on shares of The Walt Disney in a research note on Wednesday, January 10th. B. Riley boosted their price target on shares of The Walt Disney from $122.00 to $125.00 and gave the stock a “buy” rating in a research note on Wednesday, February 7th. Finally, Zacks Investment Research upgraded shares of The Walt Disney from a “hold” rating to a “buy” rating and set a $118.00 price target on the stock in a research note on Friday, February 16th. Three research analysts have rated the stock with a sell rating, ten have given a hold rating, sixteen have assigned a buy rating and one has issued a strong buy rating to the stock. The stock presently has an average rating of “Buy” and a consensus price target of $118.64.

The Walt Disney Company Profile

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. The company's Media Networks segment operates cable programming services under the brand ESPN, Disney, and Freeform; broadcast businesses, which include the ABC TV Network and eight owned television stations; radio businesses consisting of the ESPN Radio network; and the Radio Disney network.

Earnings History for The Walt Disney (NYSE:DIS)

3 Things to Watch in the Stock Market This Week

Stocks were little changed last week despite a sharp jump during Friday’s trading session following positive economic news. That boost, plus generally positive earnings reports from some of the market’s biggest players, still left both the Dow Jones Industrial Average(DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC)just modestly lower so far in 2018.

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Earnings season continues at peak pace over the next few trading days, with hundreds of companies set to report updated business trends. A few of the most anticipated releases this week will be coming fromDisney (NYSE:DIS), TripAdvisor (NASDAQ:TRIP), and NVIDIA (NASDAQ:NVDA).

Disney’s ESPN fix

Disney posts its earnings results after the market closes on Tuesday in a report that should be packed with news for investors. The media giant has a lot on its plate right now, after all. Its new ESPN app marks its boldest attempt yet to bypass the traditional network ecosystem that has produced such steady profits for the company for decades.

Early results from that direct-to-consumer service could inform management’s thinking as they prepare for an even bigger bet, a stand-alone TV streaming app, set to launch sometime in 2019.

Outside a Disney theme park.

Image source: Getty Images.

Meanwhile, investors will be watching for signs of growth at Disney’s parks and resorts business, which played a key role in pushing earnings slightly higher last quarter. And CEO Bob Iger and his team will likely provide an update on their proposed $50 billion acquisition of 21st Century Fox that, among other things, should keep Disney comfortably on top of the global box office industry.

TripAdvisor’s growth pace

The online travel booking market is huge, and growing, but TripAdvisor hasn’t benefited much from its leading industry position. In fact, sales growth slowed to just 5% in 2017 while profitability dove.

In response, CEO Steve Kaufer and his team are taking a new approach to the business that prioritizes profitability, likely at the expense of sales gains. Investors saw early results from that strategic shift in February when the company paired rising profit margin in its core hotel business with a decline in hotel shopper traffic growth to 3% from 7%. Shareholders will be looking for more progress along these lines in TripAdvisor’s Tuesday afternoon earnings release.

At the same time, executives have been encouraged with the demand they’re seeing in the non-hotel segment that includes things like attractions, tours, and restaurant bookings. This division has become a big source of revenue growth for the company and might soon start generating earnings to go along with those impressive sales gains.

NVDIA’s outlook

Few stocks are as loved by Wall Street right now as semiconductor giant NVIDIA, whose next-generation chips have a good shot at powering growth industries ranging from AI to autonomous driving to cryptocurrencies. Yet it was soaring revenue in its core gaming segment that played the biggest role in the company’s epic fiscal 2018 that included a 41% sales spike as net income jumped to $3.1 billion from $1.9 billion in the prior year.

An engineer working on a semiconductor.

Image source: Getty Images.

On Thursday the chipmaker is expected to extend that positive momentum into fiscal 2019, with consensus estimates targeting a 49% sales increase to $2.9 billion as earnings almost double to $1.45 per share. Whether the stock continues its epic run, on the other hand, will depend on the company’s ability to continue trouncing expectations by delivering market-leading chips that its customers demand.

Comcast Corporation Stock Is a No Brainer Buy Right Now

Could Comcast Corporation (NASDAQ:CMCSA) soon be a buy for investors? In fact, it may be a buy right now given the selloff that Comcast stock has suffered. Over the last month, CMCSA is down 10.8% compared to the S&P 500’s decline of 4.6%. Further, Comcast’s year-to-date performance shows a 17.3% decline vs. a decline of just 31 basis points for the S&P 500.

Why such a stark difference? Many may pin it on the company’s recent itch for M&A.

Not long ago, Walt Disney Co (NYSE:DIS) announced its plans to buy Twenty-First Century Fox Inc (NASDAQ:FOX, NASDAQ:FOXA) for more than $50 billion. FOXA is looking to close on its acquisition for Sky, which it already owns 39% of.

According to U.K. regulators, Disney will have to submit an offer to buy the remaining 61% stake should it acquire Fox before Fox acquires the rest of Sky.

Phew.

And making this all the more complex? Comcast debated a rival bid for Fox assets following Disney’s offer to buy most of Fox, then submitted a bid for Sky. So the M&A landscape is really quite murky in the media industry. It basically boils down to all the big fish wanting to buy the smaller fish.

Valuing Comcast Stock

At its highs in early January, Comcast stock was changing hands near $43. Now about $10 per share below that mark, we are now almost 25% off of those highs. Despite the murky M&A outlook, let’s look at what CMCSA has going for it in the first place.

Analysts expect solid sales growth this year from Comcast, modeling for 6.1% growth in 2018. In the following year, estimates call for lower but still respectable growth of 2.4%. On the earnings front, consensus expectations call for almost 21% growth in 2018 and 10% growth in 2019.

For this, we’re paying just 13.2 times 2018 earnings and just 12 times forward earnings estimates. I wouldn’t say that’s dirt cheap, but it is pretty darn cheap when compared to most stocks.

Worth noting is that Comcast stock also pays out a 2.2% dividend yield. There’s also the added kicker of Sky. Should Comcast somehow pry Sky away from the Disney/Fox duo in the bidding process, it would be a great strategic fit for Comcast.

It would also help boost its EBITDA, according to Wells Fargo analyst Marci Ryvicker, who argues that Comcast would likely win in a bidding war.

Other analysts have recently flipped to a buy rating on CMCSA stock, with Buckingham analysts saying a successful acquisition of Sky could act as the “major building block for a global streaming business.” Analysts at MoffettNathanson have a similar take, arguing that Comcast’s potential platform could rival that of Netflix, Inc. (NASDAQ:NFLX).

Trading CMCSA Stock Chart

Long-term, fundamental investors can see where the value lies in Comcast stock. However, there’s room for short-term traders to get in on the action too. In fact, both bulls and bears can be excited by what’s going on with CMCSA. We’ve got a simple chart laid out below:

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Click to Enlarge

Bulls can justify buying in two spots, one of which is right now. Shares are sitting right on a vital level of support (blue line), which was previous resistance in the second half of 2016. This sets up an attractive risk/reward.

However, it’s also hitting a downtrend line of resistance (black line). Should this downtrend line pressure CMCSA stock below support, a decline down to $30 is in the cards based on previous support levels. Bears can short CMCSA on a close below $30 and also have an attractive risk/reward.

However, I should point out that I find this downtrend line to be too sharp and ultimately unsustainable. It may stay in place now, but it will ultimately fail. It’s just a matter of when.

That gives bulls a second chance to buy Comcast stock if they choose to avoid it right now. A break through this downtrend line would be a bullish move and one that bulls may want to buy — particularly if CMCSA stock is above $30.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held a position in DIS. 

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