Fitch and Cramer UP on Disney

Two interesting financial events today on the Disney front.

First, Jim Cramer, the popular host of the CNBC show 'Mad Money' apparently last night gave a 'thumbs up' to Disney stock at the $30 price point. If you believe there is such thing as the 'Cramer effect' or the 'Mad Money effect' (same thing basically), then the market for Disney moved up almost 2.5% based on that fact alone.

If, like me, you think Disney is a well run company with lots of things going for it, then you realized that the drop in the last several weeks was probably just profit taking from people who had rode the stock up from the mid-to-low 20's. They probably sold since the stock was seeing pressure from moving upward and could have possibly moved downward very quickly on any bad news.

65% of Disney shares are owned by institutional investors according to Google, so it seems unlikely that 35% of the market suddenly moved the stock 2.5% because of Jim Cramer (though I enjoy his show sometimes as much as the next guy. Booyah to you!).

Like wise, a couple of weeks ago we discussed Disney's debt getting cheaper due to a positive upgrade from Fitch Ratings (you didn't sleep through that post right? ;)

Today Fitch posted their report that profiles why and how they upgraded Disney. The nice thing is it dovetails well with the plans that Bob Iger and Tom Staggs have been working on, which is to show Wall Street that Disney is more than just a 'typical' entertainment company.

Fitch notes that Disney EBITDA (that's Earnings Before Interest, Taxes, Depreciation and Amortization) is up 29% in the last twelve months, mostly due to increases in earnings from what Disney charges for their cable channels like ESPN and The Disney Channel.

Likewise they lay out a case based on previous history that the Parks & Resorts segment could absorb as much as a 10-15% decline in attendance and yet still remain profitable.

The report is available using a free registration from Fitch Ratings, and it really is a must read if you are interested in a deeper financial look at the company.

Oh, and for those of you worried about how much Disney paid for PIXAR, you'll be happy to know that Disney bought back all the shares they issued to make that deal happen from free cash flow at the end of LAST fiscal year. And then bought back another $9 billion for good measure. So don't bet on Cramer too much just yet.