The Future of the The Walt Disney Company (DIS)

Moment for the Parks to Make Contributions

Disney has invested the last few years spending substantial sums of money in its resorts and parks business. The actual consequence has been new income-generators such as the Art of Animation hotel in Orlando, the Aluani resort in Hawaii, the Disney California Adventure, the brand new cruise ships and additional development with the Shanghai Disney resort.

The problem for Disney is going to be leveraging these brand new assets into lucrative income. Even though the resorts/parks business is not typically one of the most lucrative sections of Disney, continuous double-digit margins really are not something you want to sneeze at–therefore it is a substantial portion of the pie.

In the near future, I have very little doubt that Disney’s brand new resort hotels are going to be filled with visitors, and also that its luxury cruise ships will not have any problems competing with companies like Royal Caribbean Cruises Ltd. (NYSE:RCL) for passengers. But bear in mind it is wise to take into consideration that Royal Caribbean’s net yield nudged up 1.8% year over year using a regular currency structure supported by better-than-expected close-in reservations and onboard spending. Nevertheless, the occupancy rate decreased to 101.8% from 103.0% during the prior-year quarter.

Studios – Ignore the Negative Aspects, Watch out for Live Action

Disney continues to have something to establish in its studio procedures. No one questions the corporation’s capacity to produce lucrative Pixar motion pictures or profitable Marvel features. The main factor is whether or not the corporation could get past its difficulties in non-Marvel live action motion pictures, primarily with the fresh  “Lone Ranger” and “Oz” films on the way.

And there is the Star Wars franchise, of course. Disney has undoubtedly captured considerable buzz due to its contract with Lucasfilm and its particular responsibility to produce several future Star Wars motion pictures. Unfortunately, investors certainly will not have anything to see for a couple of years.

The Implications

I would not take into consideration trying to sell Disney simply because it appears a little overpriced, although neither would I hurry to purchase with the supposition that it will effortlessly provide solid results.  I would choose to wait in case Disney trips up anywhere – lower than predicted increase from the parks business or perhaps a studio failure – and after that get the stock while shares are slightly less expensive.

The article The Future of the Walt Disney Corporation originally appeared on Fool.com and is written by Marcus Vilkas.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.