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.

3 comments:

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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