Out Fox The $treet

  Disney's stock is expected to rally in the short term due to the Penn Gaming deal and bouncing off the $85 support level. Disney's streaming business is struggling, with declining subscribers for the key ESPN+ service. The stock trades at 17x aggressive FY24 EPS targets, providing limited upside on any rally. After a horrible year,  Walt Disney Company  ( NYSE: DIS ) appears poised for a quick rally over the short term. The company has not resolved the problem in the streaming market with weak subscriber numbers and the  Penn  Gaming  ( PENN ) deal amounts to a very small deal to enter the gaming sector. My  investment thesis  is now bullish on Disney for a quick trade before the really tough market of the last couple of years has led to a double bottom for the stock around $85. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Netflix (NFLX) remains on a path to generate record subscriber additions for the year which should send the stock back to previous highs. As the year progresses, the free cash flow burn will become a huge problem as new streaming competition from Disney (DIS) and WarnerMedia (T) comes online.

The streaming video wars should reach peak competitive levels in 2019. Netflix enters the competition while burning cash at a $3 billion annual rate. The entry of the tech giants leaves Netflix at a balance sheet disadvantage with net debt approaching $10 billion in 2019. The stock is due for another rally in early 2019 for investors to fade. The planed addition of several tech giants along with traditional media players into the direct-to-consumer streaming video segment should expose the biggest weakness of leader  Netflix  ( NFLX ). The problems with developing a leading market position without building up a pristine balance sheet is that competitors can easily attack the company's weakness and ultimately prevent a player like Netflix from achieving the massive cash flows and profits warranting a market valuation of $132 billion. Read the full article on Seeking Alpha.

The FQ4 results for Disney ( DIS ) were predictably weak. The ongoing weakness in cable networks was hidden last year by the strength of movies and the media giant is now getting hit by weaknesses in both segments. Incredibly though, the stock still trades near $100 and at levels that mostly exceed the price last year. Is now really the time to own Disney as the company embarks on a digital shift? Disney missed both top and bottom line analyst estimates in a sign of how bad the times are now. The media giant has missed revenue estimates for five consecutive quarters, but the company didn't previous miss EPS forecasts. Disney faces multiple issues that can't offset the positive momentum from their parks and resorts division.

Based on Nielsen's November estimates, ESPN owned by Disney (DIS) is collapsing faster than expected. The networks of ESPN, ESPN2, and ESPNU all lost over 600K subscribers for November alone.

Summary DISH Network begins offering limited pay-TV services online. The satellite TV operator has a first mover advantage, but the service doesn't appear to offer anything proprietary that couldn't be replicated or enhanced. Content providers with the best content will benefit the most from these scaled-down online packages that feature only top channels such as ESPN and TNT. DISH Network (NASDAQ: DISH ) made the interesting announcement last week that it is joining the over-the-top revolution for pay-TV services. The company follows recent announcements by Time Warner's (NYSE: TWX ) HBO and CBS (NYSE: CBS ) to offer subscription services online to compete with Netflix (NASDAQ: NFLX ) due to the increasing amount of consumers that are cutting the cord. Read the full article at Seeking Alpha. Disclosure: Long TWX. Please review the disclaimer page for more details. 

Back when it released its  Q2 2013 earnings report , Viacom ( NASDAQ: VIAB     ) announced that it would double its stock buyback plan to $20 billion from the previous $10 billion. Most investors have a negative view of stock buybacks, but research shows that significant buybacks that reduce share counts tend to outperform the market. The diversified media entertainment sector appears overly competitive, but the sector in general has outperformed the S&P 500 over the last couple of years. One thing that the general group has shared as a whole is the desire to buy shares back over time. Some of the companies like Walt Disney ( NYSE: DIS     ) and Time Warner ( NYSE: TWX     ) weren't as aggressive in the last year, but the buybacks have continued to set the group apart. Read the full article here . Disclosure: Long TWX. Please review the disclaimer page for more details. 

With all the discussion heating up regarding the legalizing of online gambling, most investors have probably missed that skill based gambling is already legal in most states. Betting on fantasy sports and other skilled based games is legal in nearly all states and has a preferential carve-out on the Federal level under the Unlawful Internet Gambling Enforcement Act of 2006. According to Forbes contributor Marc Edelman, daily fantasy sports are insulated from federal liability if it meets three conditions as follows: The value of the prizes is not determined by the number of participants. All winning outcomes reflect the relative knowledge and skill of participants. No winning outcome is based on the outcome of the score of games or the single performance of an individual athlete in a single, real-world event. Read the full article at Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

While performing research for an article on Netflix ( NFLX ) , the constant discussion on original content made me wonder about other content generators. Especially when considering the massive valuations of entertainment content companies. As an example, nonfiction content creator Discovery Communications ( DISCA ) has a market value of $28B and The Walt Disney Corporation ( DIS ) is worth $111B. Is it possible for user generated content to ever create companies of that size? All of those firms are vastly different from a focus of distributing content in the case of Netflix to the creating content for a vast network of cable channels at Discovery to creating films and TV shows at Disney. In general, all of the companies are involved in the creation and distribution of entertainment content that has historically had significant value creation. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more deta...

March was another solid month for this model, as it beat the benchmark (up 1.95% versus 0.10 loss for the S&P 500). The model also wrapped up a solid first quarter with a 6.57% gain. For a Risk Score 1 model, the goal remains to outpace the benchmark by a slight amount eac month with greatly reduced volatility as opposed to models in higher risk scores. Trades For the month, the model sold Walt Disney (DIS) and United Parcel Service (UPS) as their net payout yields dropped below acceptable levels. Those two stocks were replaced with Gap (GPS) and Entergy (ETR). GPS maintains a modest dividend of 2%, but has made significant buybacks in the last few years. On February 24th, they announced the Board of Directors approved an additional $2 billing share repurchase authorization and a increase in the annual dividend to $.45 for 2011. For Q4 alone, they repurchased $598M of stock or an annualized rate of nearly 18% making them a top 4 net payout yield stock . ETR is another top ...

Last night Disney (DIS) announced a $.05 increase in it's dividend to $.40 a year. While not a huge increase or a huge dividend in total, it nevertheless underscores the advantage of investing in financially strong companies. DIS now has a Net Payout Yield of nearly 6.25%. The company really upped their stock repurchases in Q2 and then again in a major way during Q3. The company bought back $2.7B shares during the Q when the stock traded in the lower $30s. With the stock today over $37 those purchases are looking very good. Using the $3.7B in buyouts over the last 6 months on a annual basis the yield jumps to a much more impressive amount of over 11%. Upping the dividend was a good deal, but it would've been nice to increases it to something much higher if they have the money for such huge buybacks, With the dividend only slightly above 1% after this raise, dividend investors won't be sucked into this stock. Ideally we'd see a much more balanced approach to their ca...