Disney Stock Hits an All-Time High: Is It Still a Buy?

Shares of Disney (NYSE: DIS  ) hit an all-time high Friday after the entertainment giant turned in better-than-expected quarterly results last week.

So what has investors so excited?

Source: Disney

First, revenue grew 9.6% to $10.55 billion, beating analysts' estimates, which called for sales of $10.49 billion.

Even better, CEO Robert Iger started off the earnings conference call by highlighting non-GAAP earnings per share, which rose 36% from the year-ago period to $0.79, "driven primarily by studio, parks and resorts, and media networks."

Of course, that wasn't particularly surprising considering those businesses historically represent the lion's share of Disney's revenue and profits anyway, but the fact remains that each of Disney's segments improved considerably over last year.

Media networks, for one, managed to grow operating income by 8% to $1.862 billion, while Studio Entertainment swung to a $118 million operating profit from last year's loss of $84 million (remember John Carter, anyone?). Disney is also enjoying its 80% stake in ESPN more than ever as growth at the sports network led a $224 million increase in operating income from its Cable Networks.

On a more worrisome note, income from Broadcasting fell $91 million to $138 million as a result of higher prime-time programming costs as well as a decrease in advertising revenue from lower ratings at Disney's ABC television network.

Meanwhile, Disney's Consumer Products division grew income by 35% to $200 million, and earnings attributable to Parks and Resorts grew a whopping 73% to $383 million on record attendance.

Finally, while Disney's Interactive gaming segment continued its losing streak (sigh), it did manage to lose just $54 million in the quarter, or 23% less than the same period last year. However, as fellow Fool Demitrios Kalogeropoulos pointed out recently, that could easily change with the August launch of Disney's Infinity, which the House of Mouse hopes will be able to effectively compete against Activision Blizzard's wildly popular Skylanders franchise.

Now that doesn't mean the folks at Disney Interactive won't have their work cut out for them; remember, Activision just told us Skylanders was the No. 1 video game franchise in America last quarter in terms of total revenue including merchandise. Still, Disney's massive stable of available characters certainly makes for an intriguing game concept:

Even so, Interactive was only responsible for less than 2% of Disney's total revenue last quarter, so any success there would simply be icing on the cake for investors. Additionally, Disney's recently announced partnership to grant video game rights for Star Wars story lines to Electronic Arts should allow it to benefit by licensing its properties without assuming the work and risk related to the actual creation of the games.

Going forward, the Studio segment should also continue to perform well with upcoming Pixar sequels like Monsters University and Finding Dory, and it's safe to say most of us are well aware of the early success of Iron Man 3. In addition, as fellow Fool Tim Beyers pointed out recently, Thor: The Dark World is set for release in November, Captain America: The Winter Soldier is due out next year, and The Avengers 2 is slated for 2015.

If that weren't enough, thanks to Disney's acquisition of Lucasfilm last year, Star Wars Episode VII should also arrive in 2015, followed by at least two other character-specific Star Wars titles currently in development.

Better yet, with more than 26,000 characters to choose from between the Marvel and Star Wars universes, Disney certainly won't be running out of fresh material anytime soon.

Even better yet, management also reminded investors this week that the company is working on opportunities for Star Wars theme park attractions, which should only serve to bolster the Parks and Resorts segment that much more.

Foolish final thoughts
Let's just say Disney is currently firing on most cylinders, with the more impressive performances coming from its Parks and Resorts, Studio Entertainment, and Consumer Products divisions. Given its relative size, I suppose I'm not surprised revenue and income growth from Disney's Media Networks was less spectacular, but the segment did improve nonetheless. And while there was marked improvement at Interactive on the surface, it'd be fantastic for owners of Disney stock if Infinity could finally propel Interactive into the black. 

On that note, investors will also want to keep an eye on how ABC performs going forward, as I suspect correcting any further declines in profitability there will in all likelihood prove harder than it sounds. 

In the end, I still think Disney stock remains a buy, even as it sits near all-time highs. After all, the shares currently trade at just 21.7 times trailing earnings, or only a slight premium to the S&P 500's current price-to-earnings ratio at 19. Considering the company's seemingly endless options to keep the world entertained with its absolutely epic moat, I'm convinced that premium is well deserved.

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