>>"Another great Disney Day."<<
Yes, and it turned into a great Disney week, followed by a Valentine's Day in which signs abound of Pooh-Bear mania. The number of products bearing the Bear of Very Little Brain amazes me--socks, stuffed toys, cards, posters, and much more.
As the proliferation of Pooh products reflects, Disney is not only continuing to capture a greater share of the resorts' tourists' dollars (through the cruise ships, most lately) pursuant to Mr. Eisner's plans, but also to build upon already strong franchises. I don't have a dollar breakdown, but I suspect that if we took Pooh alone, then the bear's franchise power would create a decent income stream. (Pooh hasn't hurt Mattel, as Disney's toy licensee, either.)
I recognize that Disney has stretched beyond traditional measures of fair valuation. If we view the recent run-up as purely a matter of discounting the near-term expected increases in income, then DIS indeed looks pricey. (Nonetheless, the newer sources of income do appear to be highly promising, such as the new addition to the theme park, the play centers, restaurants, and so on.)
However, I believe that we may also be seeing a multiple expansion based on increased recognition of Disney's brand power. The tremendous success of Pooh products is just one example. To the extent investors deem Disney's income stream to be more reliable than that of a mere entertainment company, then DIS will be priced at a greater premium to the market.
Time will tell, but I won't be surprised to see DIS fly right past many analysts' 12-month targets because of a multiple expansion. Of course, the foregoing represents just my humble opinion. Frankly, though, if there weren't so many investors pointing to DIS's being "overvalued," then I would be more worried. |
