Introduction to investment finance

Walt Disney Company (DIS)

• Fundamentals - the company's business, is it financially sound? Is it growing?

Per their earnings amounts for Disney, the answer is that they are growing. They are indeed fairly financially sound, but their overall revenues are not doing all that well. Over the last three full years, revenue has grown at a clip of about $3 billion a year as they were at $42.2 billion in 2012, $45 billion in 2013 and $48.8 billion in 2014. Gross profit grew at a good clip over that same time frame, going from $18.8 billion in 2012, $20 billion in 2013 and $22.3 billion in 2014. The proportion of gross profit to total revenue did edge up slightly, albeit by about one percent. Net income has grown at about a billion per year, so it too is looking good. Total assets are growing (about five billion a year over the last three full years). Total liabilities have edged up and are a little on the high side as compared to revenues. Indeed, 2014 revenue was $48.8 billion and their total liabilities are $39.23 billion. That means that their liabilities are more than four fifths of their annual revenue.

• Price history - what have other investors been willing to pay for the stock in the past (recall price in itself is irrelevant - you are looking for P/E ratios or Price to Growth)

Per Yahoo Finance, trailing P/E ratio is 23.35….forward P/E ratio is 19.07 (dated to September 27th, 2016). Actual year-over-year growth is seven percent. In looking at Disney's P/E ratio over time, it's currently at a high. The rate was at about 17.50 five years ago, dipped all the way to 12.50 (in late 2011) and has since risen to its current level with no sharp up or down spikes over that time period.

• Price target - how much do analysis predict that investors will pay for the stock in the future?

Per the analysts that report to Yahoo, the low target is 94 bucks, the high is 132, the median is 121 and the mean is 118.37. The latter is about ten dollars higher than the current value.

• Catalysts - what will change investors' perception of the stock in the future?

Based on the headlines and metrics looked at, it would be things like how their movies do, how many people visit their theme parks and how high their debt is.

• Comparison - who are the competitors for this company? How does this stock compare to the competition? The industry averages? Consider Price/Earnings, fast growing products or services, international markets, etc.

Yahoo lists the competitors as Time Warner and Fox. Disney outdoes them on revenue by a wide margin (about $20 billion on average). Disney has the highest P/E ratio (although Time Warner is close…Fox is not) and only Fox has a higher net income, although it's only by a margin of about a billion and change.

Last Week of Activity

Over the last five business days, Disney stock has edged down by exactly a dollar…from $111.00 to $110.00. That would be about nine tenths of one percent as compared to where it started. During the midst of those five days, the stock actually swooned for about the first three days before bottoming out very early Tuesday at about $108. However, it rose back up to the $110 level about a third of the way into Wednesday the 10th and stayed on or around $110 the rest of the day. News in the media was fairly mixed but mostly positive. There was scuttlebutt about how the new host of The View (and ABC program…and ABC is owned by Disney). There also news about the NBA Finals (also on ABC) and some of the success Disney is having with its movies. However, a report on the 9th from "The Street" said that Disney could be in for a "deep drop." Indeed, when zooming out to the last few weeks, there has been a dip but not a major one. There was a lot of activity in February and March (both good and bad) but things have been mostly positive since April 1st. When comparing Disney the wider Dow average over the last five days, the Dow and Disney seem to be in sync. The Dow started right at $18,000 and then took a deep dive but got its money back on Wednesday the 10th. However, the Dow's drop was a full percent in terms of size and about 2250 in terms of overall number.

http://finance.yahoo.com/q?s=DIS&ql=1

https://finance.yahoo.com/q/co?s=DIS+Competitors

ImmunoGen Inc. (IMGN)

• Fundamentals - the company's business, is it financially sound? Is it growing?

It's apparently starting up because it has very small revenues and is losing a ton of money right now. Even so, they seem to be heading in the right overall direction. They only made $16 million in 2012, they more than doubled that to $35 million in 2013 and they nearly doubled it again by getting to nearly $60 million in 2014. However, they are losing about $70 million a year. A footnote, though, is that a ton of that money is going into selling and general admin as well as R&D. Presumably, they have investors or cash reserves to sustain them for now.

• Price history - what have other investors been willing to pay for the stock in the past (recall price in itself is irrelevant - you are looking for P/E ratios or Price to Growth)

Their stock pice is all over the map. They started in 2010 at about ten dollars and then collapsed below 6 bucks. They then spiked mostly up (but also a lot of downs) until peaking at nearly $20 in 2013 but they since bottomed out at the very end of 2014. However, they're recovered back to $14.27. Actual P/E ratio for 2014 is -13.13. In the last year, the PE ratio started off at -10 and dipped lower but has since hovered around the 6.0 mark.

• Price target - how much do analysis predict that investors will pay for the stock in the future?

There are twelve brokers who weighed in. The range is 4 to 20. The median was 10 and the mean was 10.60.

• Catalysts - what will change investors' perception of the stock in the future?

To put it simply, whether or not they can start becoming self-sufficient.

• Comparison - who are the competitors for this company? How does this stock compare to the competition? The industry averages? Consider Price/Earnings, fast growing products or services, international markets, etc.

The competitors listed on Yahoo are Pfizer, Roche Holding AG and Seattle Genetics. The last of those three is the only one in the millions…the others are in the billions. IMGN is a bit-player at this point but they are growing.