Does Disney’s Recent 7.5% Drop Signal a Fair Price for Investors in 2025?

• Wondering whether Walt Disney is fairly priced or a hidden gem? You are definitely not alone, as investors are always curious if today’s price reflects the company’s full story.
• The stock has recently moved down, losing 7.5% over the past week and slipping by 4% over the last month. This brings the year-to-date return to -4.1%.
• These declines have come as the market digests news about Disney’s evolving streaming strategy, high-profile leadership decisions, and ongoing debates over the future of its iconic assets. Industry shifts and renewed competition in media are also fueling discussion about what may be next for the company.
• Currently, Disney holds a valuation score of 4 out of 6, suggesting it is undervalued on several important metrics. It can be helpful to break down what really goes into that score, compare the conventional approaches, and explore a smarter way to think about valuation altogether.

Find out why Walt Disney's -4.6% return over the last year is lagging behind its peers.

Approach 1: Walt Disney Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today. This reflects what those future streams are worth in today's dollars. This approach helps investors judge whether a stock is priced fairly relative to its true underlying earnings power.

For Walt Disney, the most recent Free Cash Flow stands at $11.78 Billion. Analyst estimates cover the next several years, with projections showing growth to $13.27 Billion by fiscal year 2030. Only the first five years use direct analyst forecasts, while later estimates are extrapolated to maintain continuity. This two-stage approach can help account for both near-term conditions and the company’s long-term trajectory.

Based on these cash flow projections, the DCF model estimates an intrinsic value of $104.54 per share. Comparing this result with Disney’s current share price suggests the stock is priced about 1.7% above its calculated value, indicating a close alignment with its underlying fundamentals.

Result: ABOUT RIGHT

Walt Disney is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Walt Disney.

Approach 2: Walt Disney Price vs Earnings

For established, profitable companies like Walt Disney, the Price-to-Earnings (PE) ratio is a widely accepted and intuitive way to assess valuation. The PE ratio lets investors see how much they are paying for each dollar of earnings, making it especially useful for companies with consistent profits and predictable performance.

It's important to remember that a company’s PE ratio is shaped by growth expectations and risk. Companies with stronger earnings growth potential or lower risk often command higher PE multiples, while slower growth or elevated risk can drag the multiple lower. That is why it is essential to compare Disney’s PE not just in isolation, but also against meaningful benchmarks.

Currently, Disney trades at a PE ratio of 15.3x. For context, the Entertainment industry average is 21.4x, and the average among close peers is a significantly higher 66.6x. At first glance, this places Disney below both of these groups.

However, Simply Wall St’s “Fair Ratio” framework takes this analysis further by calculating a custom benchmark multiple of 24.6x, specifically tailored for Disney. This proprietary Fair Ratio accounts for the company’s growth outlook, profit margins, risks, industry dynamics, and even its market cap. By integrating these factors, the Fair Ratio provides a more accurate yardstick than simply lining up against peer or industry averages, which might not reflect Disney’s unique situation.

Disney’s current PE of 15.3x is noticeably below its Fair Ratio of 24.6x. This suggests that based on its underlying fundamentals and outlook, the stock may be undervalued by the market right now.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Walt Disney Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your unique investment story, a perspective that connects Walt Disney’s latest numbers to your own view of its future, including your assumptions for fair value, potential revenue, profits, and margins. Narratives are more than raw data; they allow you to link Disney’s real-world story, like streaming profitability or ESPN’s NFL strategy, to a financial forecast and a resulting fair value estimate.

This turns abstract numbers into an actionable path, making investment decisions easier and more personalized. On Simply Wall St’s platform, Narratives are accessible and easy to use directly on the Community page, trusted by millions of investors. You can see how current Fair Value compares to the live share price, helping you decide if now is the time to buy, hold, or sell. Narratives are continuously updated when news or earnings change, so your view always reflects the latest reality. For Disney, for example, some investors see fair value at $131.50 per share driven by ESPN’s growth, while others estimate as low as $79.00 if risks materialize, highlighting how Narratives help turn differing outlooks into clear decisions.

Do you think there's more to the story for Walt Disney? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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