The pandemic has hit this entertainment company hard, so it is no longer on the Buy list for our contributor.
The Walt Disney Company (DIS)
From Cabot Stock of the Week
I picked The Walt Disney Company because of the firm’s new streaming service, Disney+. And that’s been a huge success, with more than 54 million subscribers globally, including more than a third of U.S. homes.
But what I didn’t count on was the pandemic, which shuttered all the company’s theme parks! Yes, these parks are now slowly reopening, but attendance will be far below normal as long as people are afraid to travel—and no one knows how long that will be—including management. So, the company has furloughed employees, cut executive salaries, and it’s forgoing the semi-annual cash dividend.
But earnings estimates are still not pretty, with analysts currently looking at an EPS drop of 77% this year. As for the stock, it bottomed with the market in March and rallied for a while, but the rally has stalled since early June, and thus I no longer recommend owning DIS.
Timothy Lutts, Cabot Stock of the Week,cabotwealth.com, 978-745-5532, July 7, 2020