Investors are clearly excited about Bob Iger’s return to the Magic Kingdom. shares of Walt Disney (DIS 2.77%) rose 6.3% on news that the former CEO is returning to lead the entertainment giant into its next chapter.
As Iger returns to his old stomping grounds, several other notable names in the corporate leadership arena have also recently taken on new roles. Mary Dillon, who had great success in leadership perverted beautyis now managing director foot locker (FL 3.96%). meanwhile to the east Domino’s Pizza CEO Patrick Doyle, who has led the pizza chain through an incredible period of growth, is now executive chairman Restaurant Brands International (QSR -1.54%).
Let’s take a look at whether these three high-profile executives can take their new businesses to new heights.
Bob Iger’s second act
Disney shares are down nearly 40% year-to-date, and the company continues to face a number of challenges. It has invested heavily in streaming, but now the market is treating the streaming business model with more care. While the service has delivered incredible subscriber growth, Disney+ is currently losing a lot of money — $1.5 billion last quarter and $8 billion since its launch. Those costs caused Disney to miss earnings estimates recently.
Following the Iger news, MoffettNathanson analyst Michael Nathanson upgraded Disney stock to an outperform rating for the first time in more than two years, describing it as “a constant deadweight in media’s roughest waters.” analyst off Wells Fargo echoed that sentiment, calling Iger “probably the best media leader charged with shaking things up.”
In the 15 years of his first tenure as CEO, Disney delivered record profitability and shares soared more than 500%. Its other units, like the amusement park business, are already posting record revenues and profits. If Iger can use his media savvy and familiarity with the company to make Disney+ profitable, or at least cut its losses, shares could rise.
Mary Dillon’s new challenge at Foot Locker
Mary Dillon, the former CEO of Ulta Beauty, now runs Foot Locker and she’s in business. The first earnings report under his leadership was well received as the company reported same-store sales growth of 0.8% versus an expected decline of more than 5%. Foot Locker also upgraded its 2022 outlook to “strong momentum” during the quarter.
Those results were positive, but the stock is still down more than 30% in 2022, and indeed, as a mall retailer, it’s struggled for years because of investor concerns and concerns about its presence. Nike will end its relationship with him as the sneaker maker focuses on its direct-to-consumer strategy. For these reasons, the stock trades at just 7.5 times earnings.
That low bar, however, means Dillon has ample opportunity to turn things around. During her time at Ulta Beauty, the stock tripled in value. Dillon significantly increased Ulta’s digital sales and will now put great effort into growing Foot Locker’s e-commerce presence. Additionally, the company is reducing its exposure to malls by closing some mall locations and opening new “Community” and “Power” stores.
Investors’ fears about the end of the retailer’s relationship with Nike were also reported as overblown. Nike’s share of Foot Locker sales was higher than management expected in the most recent quarter. Dillon specifically emphasized that the company is looking forward to new Jordan-branded sneakers as part of the Foot Locker holiday collection. It’s also seeing sales growth from brands like New Balance, crocodiles, and UGG, showing that it’s not just dependent on Nike.
Dillon looks like he has a plan and I wouldn’t bet against him. Given its stellar track record and low expectation of Foot Locker closing before it arrives, this stock could be a serious long-term winner.
Invested in Patrick Doyle restaurant brand, success
Restaurant Brands International shares have outperformed the broader market, up 10% year over year. The stock rose this month on news that Patrick Doyle, the former CEO of Domino’s Pizza, has joined the company as chairman of the board. Owns the restaurant brands Burger King, Popeyes Louisiana Kitchen, Tim Horton’s and Firehouse Subs.
Doyle has some serious skin in this game — he’s announced he’s going to buy 500,000 shares of Restaurant Brands worth $60 million. Doyle will also forego a salary and will be paid in stock awards. These bonuses will be awarded if the stock price surpasses $81.32 in five years, with further bonuses being awarded if the price surpasses $122, clearly believing that there is significant upside potential to be found here. Is.
The condition of the restaurant brands is not bad. Its shares have performed well this year, and valuations of 22 times earnings are in line with those of its peers. However, there’s plenty of room for restaurant brands to grow and for Burger King to reclaim its place as America’s second-largest burger chain. wendyDuring Doyle’s tenure at Domino’s, his stock rose more than 2,200% in eight years. If he gets even a fraction of it here, the shareholders should be happy.
All three of these superstar executives are proven to be taking quantifiable steps to lead well-known, consumer-centric companies. All three have the industry expertise and business acumen to take their new businesses to new heights.
Of the three stocks, I find Foot Locker and Restaurant Brands to be the most compelling options. Foot Locker trades at a dirt-cheap valuation, leaving room for sizeable gains as Dillon leads the company’s turnaround, and its dividend — which yields about 4.5% — is the icing on the cake. Restaurant Brands seems like a good investment given its dividend yield of more than 3% and Doyle’s significant interest in stocks that should be successful over the long term.
I’m optimistic that Iger has what it takes to lead Disney, but I’m more cautious about the stock because the streaming market is slowing, Disney’s valuation is higher, and it doesn’t pay a dividend. Still, I wouldn’t be surprised if Iger brought the magic back to Disney in a year’s time.
Michael Byrne has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino’s Pizza, Nike, Ulta Beauty, and Walt Disney. The Motley Fool recommends Crocs, Foot Locker, and Restaurant Brands International Inc. and recommends the following options: the January 2024 $145 call on Walt Disney and the short January 2024 $155 call on Walt Disney. The Motley Fool has a disclosure policy.