Disney (DIS) Stock Still A Killer Value After Ticket Hike

Walt Disney Co (NYSE:DIS), the world’s preeminent theme park operator, has also been lighting up Wall Street lately. Led by its enterprising CEO Bob Iger, DIS stock has been crushing the broader market for years.

walt disney co dis stock ticket price raiseIn the past year alone, DIS stock is up 31%, doubling the 15% gains of the S&P 500. The returns of Disney stock over the last 5- and 10-year periods are also wildly impressive, crushing the returns of the S&P by 150 percentage points and 220 percentage points, respectively.

While investors might worry that this remarkable run — like Disney’s fantastical movies — is too good to be true, DIS stock still has plenty of runway left.

Magic Kingdom Ticket Prices top $100 for First Time

DIS decided to do something that will make vacationing parents around the world cringe this weekend, raising ticket prices at a number of its most popular theme parks.

Ticket prices at the Magic Kingdom rose 6% to $105, while tickets for the other three Orlando-based Walt Disney World theme parks rose 3% to $97. Disneyland and Disney California Adventure prices also rose 3%, hitting $99 a pop. While consumers will understandably not be overjoyed with the across-the-board price hike, the move is actually good news for DIS stock holders.

After all, the company’s iconic theme parks have a long history of raising prices, and DIS stock holders should know that consumers have been quite willing to pay the premium for that Disney magic.

From the perspective of Disney stock, the 6% price hike at the Magic Kingdom and even the 3% hikes at its other locations easily cover the current rate of inflation. In December, the Consumer Price Index rose just 0.8% year-over-year; some in the financial industry are even worried about deflation.

Plus, the fact that competitors like Comcast Corporation’s (NASDAQ:CMCSA) Universal Parks and Resorts and SeaWorld Entertainment Inc (NYSE:SEAS) often raise their prices in unison following price hikes by Disney suggests that DIS has nothing to worry about.

Think Tickets Are Too Expensive? Let It Go

Let’s remember, shall we, that buying DIS stock doesn’t just give you exposure to Disney’s best-in-class theme parks. Disney is a worldwide media and entertainment conglomerate, and the company owns or holds significant interest in a number of cable networks, from ESPN to ABC Family to A&E Networks to, of course, the namesake Disney Channels.

Futhermore, under Iger’s visionary leadership, DIS has acquired some of Hollywood’s top sculptors of blockbuster hits, picking up Pixar Animation Studios in 2006, Marvel Entertainment in 2009 and Lucasfilm in 2012.

This broad diversification means that raising ticket prices hardly threatens to crush DIS stock. In fact, after boosting ticket prices by 4% last February, revenue from its Parks & Resorts segment rose 7% in FY 2014.

In 2013, the price of admission to the Magic Kingdom rose 6.7% while ticket prices at other theme parks rose 1%. That year, Parks & Resorts revenue rose by 9%.

With DIS stock fresh on the heels of a blowout first quarter where Frozen merchandise continued to sell like hotcakes a full year after the animated holiday movie’s release, there are more than enough reasons to feel magical about Disney today.

As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/02/walt-disney-co-dis-stock-ticket-price-raise/.

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