The Walt Disney Co (The Walt Disney Co) Predictability Rank

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What is The Walt Disney Co Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

The Walt Disney Co Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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The Walt Disney Co (The Walt Disney Co) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » The Walt Disney Co (NYSE:DIS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

DIS:Mexico DIS_KZ:Kazakhstan 1DIS:Italy WDPd:UK 0QZO:UK WDP0:Germany WDP:Germany WDP:Germany WDP:Germany WDP:Germany DIS:Chile DIS:Canada DISB34:Brazil DIS:Austria DIS:Argentina

Address

500 South Buena Vista Street, Burbank, CA, USA, 91521

Website

https://www.thewaltdisneycompany.com

Disney operates in three global business segments: entertainment, sports, and experiences. Entertainment and experiences both benefit from franchises and characters the firm has created over the course of a century. Entertainment includes the ABC broadcast network, several cable television networks, and the Disney+ and Hulu streaming services. Within the segment, Disney also engages in movie and television production and distribution, with content licensed to movie theaters, other content providers, or, increasingly, kept in-house for use on Disney's own streaming platform and television networks. The sports segment houses ESPN and the ESPN+ streaming service. Experiences contains Disney's theme parks and vacation destinations, and also benefits from merchandise licensing.

Executives

Sonia L Coleman	officer: Sr. EVP and Chief HR Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Brent Woodford	officer: EVP, Control, Fin Plan & Tax	1441 GARDINER LANE, LOUISVILLE KY 40213
Amy Chang	director	2100 SEAPORT BLVD., C/O INFORMATICA CORPORATION, REDWOOD CITY CA 94063
Kevin A Lansberry	officer: Interim Chief Finan Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Christine M Mccarthy	officer: SEVP-Chief Financial Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521-0964
Carolyn Everson	director	C/O THE HERTZ CORPORATION, 225 BRAE BOULEVARD, PARK RIDGE NJ 07656-0713
Kristina K Schake	officer: Sr. EVP and Chief Comm Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Horacio E Gutierrez	officer: Sr EVP, General Counsel & Secy	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Geoff Morrell	officer: SEVP Chf Corp Affairs Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Robert A Chapek	officer: Chief Executive Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Paul J Richardson	officer: Sr. EVP and Chief HR Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Calvin Mcdonald	director	C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7
Robert A Iger	director, officer: Chairman and CEO	C/O WALT DISNEY CO, 500 S BUENA VISTA STREET, BURBANK CA 91521-1062
Zenia B. Mucha	officer: SEVP Corporate Communications	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521
Mary Jayne Parker	officer: SEVP and Chief HR Officer	500 SOUTH BUENA VISTA STREET, BURBANK CA 91521-0966