Assessing The Walt Disney Company’s (NYSE:DIS) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess DIS’s recent performance announced on 29 December 2018 and evaluate these figures to its long-term trend and industry movements.
How Well Did DIS Perform?
DIS’s trailing twelve-month earnings (from 29 December 2018) of US$11b has increased by 0.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 11%, indicating the rate at which DIS is growing has slowed down. To understand what’s happening, let’s take a look at what’s occurring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Walt Disney has invested its equity funds well leading to a 20% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the US Entertainment industry of 7.4%, indicating Walt Disney has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Walt Disney’s debt level, has declined over the past 3 years from 20% to 18%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 37% over the past 5 years.
What does this mean?
Walt Disney’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Walt Disney has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Walt Disney to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DIS’s future growth? Take a look at our free research report of analyst consensus for DIS’s outlook.
- Financial Health: Are DIS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 29 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.