In today’s note Goldman Sach’s upgraded The Walt Disney Company to “conviction buy” because of accelerating growth at ESPN and double-digit revenue and operating income growth.
And U.S. parks revenue growth is being driven by improvement in U.S. employment, better pricing on admission tickets and hotels, and growth from new park projects like cruise ships and a Hawaiian resort.
Interestingly, data from the past 22 years shows a “tight correlation” between Disney’s U.S. theme park revenue growth and nonfarm payroll growth. In FY2011 revenue at U.S. parks grew 10 per cent year-over-year, on growth of 1 per cent in average nonfarm payrolls, and unlike 1991, Disney’s U.S. park revenue recovered with improvement in nonfarm payroll.
Goldman expects nonfarm payroll to accelerate modestly in 2012 and here’s a chart from Goldman which shows 7 per cent growth in U.S. park revenue:
Photo: Goldman Sachs Global Investment Research