- Disney’s proposed acquisition of much of 21st Century Fox positions it well as it gears up to launch its own streaming service.
- Netflix continues to borrow aggressively to finance its own expansion of its content library.
- Netflix is posting impressive growth, but it’s still much smaller — and has fewer resources — than its established competitor.
The Walt Disney Co. (DIS) fired a big shot across the bow of the rest of the digital content industry when its proposed acquisition of 21st Century Fox was approved in the U.S. The deal expands Disney’s already impressive content portfolio as it gears up to launch its stand-alone streaming service. However, Netflix (NFLX) does not appear at all willing to cede ground in the content wars, firing its own salvo in the form of another $2 billion in debt to finance its ever-growing library of original content.
So, which company is poised to seize the largest piece of the rapidly growing streaming video pie, Netflix or Disney? And perhaps more importantly, which offers investors the better potential returns?
Disney vs. Netflix Stock Comparison
Here’s a basic comparison of Disney and Netflix:
|Market Cap||$175.3 billion||$145.3 billion|
|2017 Revenue*||$55.1 billion||$11.7 billion|
|2017 Profits*||$9 billion||$558.9 million|
|2017 Revenue Growth*||-0.89%||32.41%|
|2017 Profit Growth*||-4.38%||199.41%|
|GOBankingRates’ Net Worth Evaluation||$117.9 billion||$9.6 billion|
|Stock Gain/Loss Last Month||6.75%||-7.76%|
|Stock Gain/Loss Last Year||20.48%||71.59%|
Why You Might Pick Disney:
- Disney offers a dividend at a 1.41 percent yield while Netflix neither offers a dividend nor has it announced any intention to do so in the near future.
- Disney’s profit margin of more than 20 percent and operating margin of over 25 percent dwarf those of Netflix, which stand at 8.48 percent and 10.98 percent respectively.
- To say Disney is the better value buy is an understatement: Disney’s P/E ratio of 14.88 and P/S ratio of 3.03 are a mere fraction of Netflix’s 118.9 P/E ratio and 9.76 P/S ratio.
Why You Might Pick Netflix:
- In a word, growth. Not only did Netflix improve revenue by about a third last year, it more than doubled that figure in just three years.
- Despite low profit margins, Netflix posted the better return on equity number at 30.29 percent to Disney’s 25.73 percent.
- Netflix stock is currently in a much stronger growth trend, returning over triple that of Disney over the last year even after accounting for dividends.
The Final Word on Disney vs. Netflix
It’s a tale as old as time: Netflix is the fast-rising new challenger to Disney’s established presence in the media landscape. If Netflix can keep growing at its current pace, it could be the disruptive force that ultimately unseats Disney from its lofty perch. But if Disney can effectively leverage its existing media empire as it pivots to streaming, it could keep its position on the top of the heap.
See how Netflix’s investment in new shows is boosting its stock price.
More on Investing
- Uber vs. Lyft: Which Ride-Hailing Service Stock Should You Buy?
- 10 Safe Investments With High Returns
- Macy’s vs. The Gap: Should You Buy Monday’s Retail Bounce?
- Watch: We Know Warren Buffett’s Best Investing Secret, Do You?
We make money easy. Get weekly email updates, including expert advice to help you Live Richer™.
This article is produced for informational purposes only and is not a recommendation to buy or sell any securities. Investing comes with risk to loss of principal. Please always conduct your own research and consider your investment decisions carefully.
*Disney’s fiscal year ends with the third quarter.