Subject: Disney - Valuation
(Originally posted on BRK board - moving it here to drive more discussion)


Disney is under a lot of pressure right now - specifically with their streaming strategy - but that also creates opportunity as the stock price is looking attractive with limited downside.

Margins are in the tank right now - but they have proven in the past that they can operate at a 15% (or higher) rate. Can they get back to that level?

The big question is what to do with the traditional television assets (ABC, ESPN). Maximizing the value of these is critical to getting back on track - I am pretty confident they can operate the streaming business at acceptable levels (NFLX operates at 15% margin).

Here is a simplistic model - that illustrates the bull case thinking

* Grow revenues at 5% from $80B to $92B in next 3 years
* Improve operating margins to 15%
* This would generate $14B in income
* This would roughly translate to $6 in EPS

tecmo
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