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December 30, 2005

Chronicles of Narnia Performing Very Well for Disney

With the kids out of school and lots of folks on vacation, everyday is a Saturday for the box office, and Disney (DIS) looks like a big winner as The Chronicles of Narnia: The Lion, The Witch, and The Wardrobe is established at the top of the charts bringing in around $9 million a day. The film looks set to soar well over $200 million in domestic box office by the end of the New Year’s weekend and I think it has a shot at matching the box office for the latest film in Warner Brothers Harry Potter series. The Narnia franchise appears to be established and looks set to contribute for years as the current and upcoming movies cycle through the DIS operating divisions.

DIS is setting up for a couple of real strong quarters on the financial side and I think the market has got to notice soon. DIS is one of those large cap stocks trading at a moderate P-E that the market has ignored. Consensus for 2006 is $1.41, placing the P-E at 17, quite reasonable in my opinion, given momentum at ESPN, the movie studio, the theme parks and ABC and the possible sale of the radio business. Negotiations with Pixar Animation (PIXR) have not resulted in any announcement yet. The outcome could cut both ways for DIS and a negative result is one of the only near-term risks I see in the DIS story.

Posted by Steve Birenberg at December 30, 2005 09:52 AM in DIS