Sunday, June 03, 2007

Disney is Worth $65 per Share

Based on the valuations of the various segments of the Walt Disney Co. (DIS), and using comparable P/E ratios and P/S ratios from related companies to back into a value of the segments, the stock would have a breakup value of about $65 per share. The segments analyzed were Cable Networks, Broadcasting, Parks & Resorts, Studio Entertainment, and Consumer Products. The stock valuation was averaged between earnings and sales ratio values. A 30% discount was applied to account for errors, forced sales, fluctuations in earnings or revenues prior to liquidation, etc.

Don't agree with me? That's great! I have published my analysis on Google (GOOG) Spreadsheets and it can be viewed here. So you can copy the data to an Excel spreadsheet and re-run the numbers with your own assumptions.

Unfortunately, I haven't found a way to post the spreadsheet to allow viewers to download it with formulas, without giving them full rights to change the worksheet. If I find a way, I will get it posted in a downloadable format.

Author has owned DIS for many years. An estimate of value is not an expressed or implied recommendation to purchase the stock.


di4stroke said...

Your calculations don't seem to consider debt levels of Disney. So, while $65 might be a good assessment of the firm'd enterprise value, you need to back out debt per share to get to share value.

Stockerblog said...

Debt isn't applicable since this isn't a valuation of book value. It is an estimate of market capitalization for each segment (with the company's debt allocated over the segments) based on P/E and P/S. It assumes the company is broken up, not each segment sold off. If I back out debt, then I haven't taken into consideration that the comps have debt also.

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