Walt Disney Co is a strong brand with an effective execution that has helped OpCF and FCF grow during the years.
In this short article, I would like to show you why I am interested in Disney and I will consider buying in the next dip.
Few main reasons:
1) Very strong brand
Every kids and family own products or movies from Disney. My father know them, I grew up with their movie and my daughter will do the same with their toys, movies and theme parks.
2) Amazing business model
They dedicate few years of hard work to produce a movie and they will collect 50 years of royalties. The business model is Compounding every year.
3)Very consistent and growing Free Cash Flow
In the picture below, you can see: the OpCF has more than doubled in 10 years, FCF almost double and always much bigger than Dividends paid, showing that Management has been always prudent.
4)FCF should increase faster next year
As they have completed the Shangai Resort, Capital Expenditure should decrease and OpCF should increase. The sum will be a much bigger FCF expected for 2017
However, the current price compared to my usual investment is a bit high, so I am considering buying Disney in the next dip, especially if the price will get close to 80$. Capitalization will be close to 120B$ and 2018 FCF around 9.5B$.
Disclosure: I am considering to go long in DIS