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BATTERED MOUSE BACK FROM BRINK?

Byline: Dave McNary Daily News Staff Writer

Is it time to load up on Mickey Mouse again? Has he been punished enough?

Shares of Burbank-based Walt Disney Co. rose nearly 11 percent Tuesday in the first positive news for shareholders all summer, gaining $2.9375 to $30.375 to erase all but 25 cents of Monday's loss.

But that's little relief for stockholders, since Wall Street has spent the summer knocking down the entertainment giant. Since hitting a split-adjusted high of $42.33 on May 4, Disney dropped more than 35 percent through Monday's meltdown, making it the second-worst performer among the Dow Jones industrial average's 30 blue chips in that time. Only Boeing Co. turned in a worse performance.

Tuesday's gain lifted Disney to 24th place from 29th among the Dow 30 since it peaked four months ago. Aside from Monday's $3.1875 decline, the worst day came on June 30 - a $2.71 plunge to $35.03 after seven analysts cut earnings estimates due to disappointing results in movies, videos and consumer products.

Disney subsequently posted better-than-expected returns for three late-summer movies: ``Armageddon,'' with nearly $189 million in domestic grosses; ``The Parent Trap,'' over $56 million; and ``Halloween: H20,'' topping $50 million. With foreign, video and TV revenues included, all should be solidly profitable.

In recent weeks, the stock's ongoing decline has led several analysts to conclude Disney may now be significantly undervalued. ``We are definitely telling investors to take advantage of the opportunity to purchase high-quality companies like Disney,'' said Linda Bannister of Edward Jones & Co., who recently repeated a ``strong buy'' rating. ``It could go into the low $40s but that really depends on overall trends in the market.''

Stewart Halpern of ING Barings Furman Selz reiterated his buy rating Tuesday and predicted the stock will hit $40 at the end of the year and $48 to $50 at the end of 1999. He noted that at the $27.50 price, its relative valuation was lower than in 1991, when the recession knocked theme-park attendance and broadcasting ad spending to their biggest declines in 20 years.

``We believe the relative valuation is compelling,'' Halpern said, noting the stock was 44 percent below the average of global consumer-brand-driven stocks.

Halpern projected Disney's performance in the current quarter ending Sept. 30 will continue on track with previously issued estimates. He said theme-park attendance is holding up while creative content (which includes movies and videos) has improved over last quarter despite continued slowness in Asia.

DISNEY AND THE DOW

Burbank-based Walt Disney Co. has had a volatile ride on Wall Street this year. After rising steadily from the beginning of the year to early May, shares of Disney dropped 35 percent by Monday. Yet on Tuesday, it was the biggest gainer among the 30 companies that comprise the Dow Jones industrial average.

Jan. 2, 1998: $33.05

Aug. 31, 1998: $27.44

Sept. 1, 1998: $30.38

BEST AND WORST OF DOW JONES INDUSTRIAL AVERAGE (Since May 4)

Wal-Mart Stores + 15.06%

Philip Morris Co. + 6.23

Eastman Kodak + 2.54

Hewlett-Packard - 35.25

Walt Disney Co. - 35.25

Boeing Co. - 39.49

TODAY`S RESULTS (x)

Walt Disney Co. +9.79

Caterpillar Inc. +8.74

AT&T Corp. +6.98

McDonalds Corp. +6.80

Boeing Co. +6.67

Sears Roebuck +5.64

Alum. Co. of America +5.43

Merck & Co. +5.28

United Tech Corp. +5.25

J.P. Morgan +5.11

Johnson & Johnson +5.07

American Express +5.05

IBM+4.72

Procter & Gamble +4.58

Wal-Mart Stores +4.57

Coca Cola Co. +4.51

Union Carbide +3.73

General Electric +3.28

Hewlett-Packard +2.96

Allied Signal Inc. +2.55

Intl. Paper Co. +2.20

General Motors +2.16

Eastman Kodak +2.16

Chevron Corp. +2.11

Philip Morris Co. +2.11

Goodyear Tire +1.53

Exxon Corp. +1.43

3M -0.73

Du Pont -1.52

Travelers Group -2.39

(x) Results given in percentages

SOURCE: Daily News research, Bloomberg News

CAPTION(S):

Box

BOX: DISNEY AND THE DOW (see text)
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Article Details
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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Sep 2, 1998
Words:676
Previous Article:EDITORIAL : GETTING REAL; ELECTED CHARTER REFORM COMMISSION BEGINNING TO DEAL WITH CITY'S MOST CRITICAL ISSUE: NEIGHBORHOOD COUNCILS.
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