Walt Disney (NYSE:DIS) - Share price, News & Analysis

Q: What is the Fair Price of DIS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

DIS ($97.18) is trading below our estimate of [[fair value]] ($228.07)

DIS fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	4/6
Past Performance	2/6
Financial Health	3/6
Dividends	0/6

DIS Stock Overview

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide.

Rewards

Trading at 57.4% below our estimate of its fair value

Earnings are forecast to grow 29.91% per year

Became profitable this year

Risk Analysis

No risks detected for DIS from our risk checks.

Walt Disney Competitors

Tencent Music Entertainment Group

NYSE:TME

US$8.9b

Warner Music Group

NasdaqGS:WMG

US$13.2b

Warner Bros. Discovery

NasdaqGS:WBD

US$35.0b

Netflix

NasdaqGS:NFLX

US$82.6b

Price History & Performance

Summary of all time highs, changes and price drops for Walt Disney
Historical stock prices
Current Share Price	US$97.18
52 Week High	US$187.58
52 Week Low	US$92.01
Beta	1.22
1 Month Change	-10.57%
3 Month Change	-26.70%
1 Year Change	-44.05%
3 Year Change	-31.37%
5 Year Change	-6.41%
Change since IPO	909.66%

Recent News & Updates

Jul 05

Disney: Swap Hulu For Roblox

Disney's future is becoming increasingly more dependent on the streaming industry, but Hulu continues to underperform competitors. Disney should return its focus on children's content, and a great way to do so would be to sell Hulu and buy Roblox. The acquisition of Roblox would also help protect the company from a possible downturn, as video games tend to be recession-resistant. Disney (DIS) is solidifying its place in the streaming industry through its large market share and top content. However, Hulu has been struggling to grow in the previous years and a likely reason is because of its adult-oriented content mismatching with Disney's strengths. Therefore, Disney should try to sell the service to another media company and then make a proposal to acquire Roblox (RBLX). This would allow the company to reach more of its target audience and also protect itself from a possible upcoming recession. Even if this swap never occurs, Disney is still likely in a strong position since the lagging effects of a recession are likely far away. Due to all of this, and the current share price Disney is trading at, the stock is becoming an attractive pick. Disney's Future is Streaming, But Hulu Cannot Keep Up The future of Disney is appearing to move towards streaming. In the company's second quarter report, it was reported that Disney+ reached over 137.7 million subscribers and is continuing its rapid growth. ESPN+ also reached new highs of 22.3 million subscribers and is continuing to grow steadily, although not at the same pace as Disney+. Hulu also gained more subscribers and reached 45.6 million subscribers, but the platform has been struggling to grow in previous years. Since 2019, Hulu has grown its subscriber count by about 50%, while Disney+ has increased its total subscriber count by 5x and ESPN+ has grown by 3x. With Hulu far underperforming Disney's other streaming platforms, a change may need to be made. Subscriber Growth of Streaming Services (Created by Author) Not only is Hulu underperforming Disney's other products, but it is also losing its share against other competitors. Disney currently holds about 25% of the market share through its three major streaming services. However, Hulu has been seeing a fall in market share for quite some time now. Currently, Hulu holds about 11% of the market share for the streaming industry and is on a downward trend. With smaller competitors like Apple TV+ (AAPL) and Paramount+ (PARA) starting to gain steam, Hulu may continue to lose its market share. In fact, Apple TV+ recently reached 5% of the market share and is rising rapidly. Paramount+ is growing slower but has still attained 4% of the market share. These could prove to be huge threats to Hulu in the upcoming periods. Streaming Market Share (JustWatch.com) Disney Should Attempt to Sell Hulu and Buy Roblox Other than the clearly lagging performance of Hulu, why else would Disney want to sell Hulu? The biggest reason is because of its mismatch with the company's other content. Unlike most of its content, Hulu streams programs that are adult-oriented and this is not Disney's strength. Disney has been the long-time undisputed leader in children's content and has been very profitable by focusing heavily on that demographic. However, its more mature platforms including Hulu have underperformed its other content consistently. Therefore, it may be best for the company to sell Hulu and return to its focus on children's content. The next question following this conclusion is who should Disney sell Hulu to? The most likely candidate, in this case, would be Comcast (CMCSA). Comcast already owns one-third of Hulu and does not have the option to sell its stake until 2024. However, holding onto its stake and taking full ownership could be a smart decision to improve business. Peacock is Comcast's largest streaming service and is only available in the United States. This matches up with Hulu since it is largely only available in the United States, although it does have a smaller user base in Japan. With Comcast having a strong focus on the U.S. streaming market, Hulu could help further improve its presence and drive the company's fundamentals higher. Even though Hulu would likely help improve Comcast's fundamentals, the company still may not acquire the streaming service. This could be signified by the company giving full operational control to Disney in 2019 and an option to sell its stake to Disney for a valuation of at least $27.5 billion. With this in mind, Comcast may end up not accepting an offer to buy Hulu in the future and this means another candidate may have to be found. Other possible candidates to buy the streaming service could be Netflix (NFLX), Warner Bros. Discovery (WBD), Paramount Global (PARA), or other media companies. The final question with this sale is what should Disney do with the money? The answer would likely be to return back to its strength in children's content. This could be done through the acquisition of Roblox. Unlike Hulu, Roblox has grown its users massively since 2019. In the past 3 years, the company has grown its daily active users from 13.7 million to 54.1 million. This represents a quarterly growth rate of about 11%. Furthermore, the majority of these users are in Disney's core audience with 54% being under the age of 12 and 67% being under the age of 16. Disney would also likely get a great deal for this acquisition since Roblox stock has dropped by over 60% YTD and will likely continue to drop further with tech stocks continuing to be sold. Data by YCharts A big concern many investors are having with the possible acquisition of Roblox is Disney's previous failures with video games. This is referring to the failure and shutdown of Club Penguin after the company acquired the game for $700 million and led to many of Disney's other games shutting down so the company could focus more on its new acquisition. The main reason for Club Penguin failing was because of Disney's inability to adapt to mobile gaming and the declining interest in paying a monthly subscription for the game. On the bright side, Roblox has already handled both of these issues for Disney. Roblox is one of the most popular games on iOS and Android and reached nearly 400 million downloads in June 2020. Furthermore, Roblox is free to play and does not require a subscription. Instead, the game generates revenue mainly through the sale of its in-game currency, advertising, licensing, and more. This likely means Roblox will not be another gaming failure for Disney since the heavy lifting has already been done. Disney's Parks are Recovering But Could Be Heading Towards a Rough Future Now that the pandemic is going away, Disney's parks and experiences are coming back and are gaining lots of steam again. In the second quarter of 2022, Disney generated $6.65 billion through its parks and related products. This is a huge increase from last year's second quarter when the parks generated only $3.71 billion in revenue. It is important to note that the majority of this revenue was generated through the company's domestic parks since many international parks are still facing issues with the virus. Revenue of Disney Parks, Domestic vs. International (Created by Author) Although Disney's parks have been recovering after the pandemic, they could be heading into another tough future with a recession likely on its way. A recession usually causes discretionary spending to see sharp declines as consumers begin to cut out unnecessary expenses. This can already be seen with the consumer discretionary section of the S&P 500 being down 33% YTD. With Disney's parks likely to face this downturn in spending too, the company may struggle to push its top line higher. To see how Disney's parks could perform during a recession, we can look back to the Great Recession. In the second quarter of 2009, the parks' operating income fell by 50% when compared to the year prior. Revenue also fell by 12% in the same time period. The weaker margins were caused by Disney's attempts to drive attendance higher. This included lowering hotel rates to allow more consumers to afford the stays. Although this was successful in driving up the hotel occupancy rate, the spending per room dropped by 17%. Media analyst Lauren Martin described: It's a horrible decision. Either your hotels are empty but per-room spending isn't so bad, or fill 'em up with three days free, but spending gets decimated per room. With the parks likely having a bleak future ahead, Disney should look to a different recession-resistant business to weather the storm. Just like its streaming segment, Roblox could be the answer. Video games tend to be recession-resistant due to consumers looking for alternative forms of entertainment besides going out. From 2007-2009, revenue of video game developers Activision Blizzard (ATVI) and Electronic Arts (EA) soared despite lower consumer spending. On the other hand, Six Flags (SIX) saw a decrease in revenue. In the case of another recession, Roblox would likely outperform Disney's parks, once again proving it would be a great acquisition for the company.

Jun 24

Why 'Lightyear's' Failure To Launch Isn't Tied To Disney's Streaming Strategy

Disney’s approach to streaming has long been a hot button issue over the last year and some blame it for the poor performance of “Lightyear” at last weekend’s box office. The argument is that people stayed home because they knew the movie would be coming to Disney+ within the next few months, lessening initial demand for theatrical viewing. In reality “Lightyear” is a movie that tried to be so many different things it ended up outsmarting itself and that’s why it made less in its initial weekend. In a rare misstep, “Lightyear” was mis-marketed by Disney, with the company not being able to explain how it fit into the “Toy Story” universe and connected to the overall franchise. It is easy to blame the streaming element, but the marketing, the creative choices and a higher parental rating all come into play first.

Jun 20

10% Down Exposure - How Disney's (NYSE:DIS) Stock Compares to Industry Peers

The Walt Disney Company (NYSE:DIS) is trading at a 63x Price to Earnings, while dropping 50%+ from the March 2021 highs. The company is expected to start recovering this year, and in our analysis we will evaluate how much profit can investors expect, as well as what does that mean for Disney's stock price.

Jun 13

Disney: Abundant Uncertainty

Uncertainties regarding Disney’s Direct-to-Consumer strategy make it very challenging to derive a valuation for the company. The Parks, Experiences and Products segment looks to be in excellent shape and provides solid support for the share price. Applying a sustainable earnings approach, I arrive at a HOLD rating.

Shareholder Returns

	DIS	US Entertainment	US Market
7D	1.3%	2.5%	0.3%
1Y	-44.1%	-51.1%	-18.4%

Return vs Industry: DIS exceeded the US Entertainment industry which returned -52.8% over the past year.

Return vs Market: DIS underperformed the US Market which returned -19.1% over the past year.

Price Volatility

Is DIS's price volatile compared to industry and market?
DIS volatility
DIS Average Weekly Movement	4.9%
Entertainment Industry Average Movement	11.8%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.8%
10% least volatile stocks in US Market	3.3%

Stable Share Price: DIS is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: DIS's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1923	166,250	Bob Chapek	https://www.thewaltdisneycompany.com

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. It operates through two segments, Disney Media and Entertainment Distribution; and Disney Parks, Experiences and Products. The company engages in the film and episodic television content production and distribution activities, as well as operates television broadcast networks under the ABC, Disney, ESPN, Freeform, FX, Fox, National Geographic, and Star brands; and studios that produces motion pictures under the Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar, and Searchlight Pictures banners.

Walt Disney Fundamentals Summary

How do Walt Disney's earnings and revenue compare to its market cap?
DIS fundamental statistics
Market Cap	US$177.01b
Earnings (TTM)	US$2.71b
Revenue (TTM)	US$76.62b

65.4x

P/E Ratio

2.3x

P/S Ratio

Is DIS overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
DIS income statement (TTM)
Revenue	US$76.62b
Cost of Revenue	US$50.74b
Gross Profit	US$25.89b
Other Expenses	US$23.18b
Earnings	US$2.71b

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	1.49
Gross Margin	33.79%
Net Profit Margin	3.53%
Debt/Equity Ratio	50.0%

How did DIS perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is DIS undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for DIS?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for DIS. This is calculated by dividing DIS's market cap by their current preferred multiple.
What is DIS's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$177.01b

DIS key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	3x
Enterprise Value/EBITDA	21.3x
PEG Ratio	2.2x

Price to Earnings Ratio vs Peers

How does DIS's PE Ratio compare to its peers?

DIS PE Ratio vs Peers

The above table shows the PE ratio for DIS vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	26.1x
TME Tencent Music Entertainment Group	22x	14.6%	US$8.9b
WMG Warner Music Group	36.4x	19.0%	US$13.2b
WBD Warner Bros. Discovery	29.4x	64.9%	US$35.0b
NFLX Netflix	16.5x	17.3%	US$82.6b
DIS Walt Disney	65.4x	29.9%	US$177.0b

Forward PE

Price-To-Earnings vs Peers: DIS is expensive based on its Price-To-Earnings Ratio (65.4x) compared to the peer average (26.1x).

Price to Earnings Ratio vs Industry

How does DIS's PE Ratio compare vs other companies in the US Entertainment Industry?

Price-To-Earnings vs Industry: DIS is expensive based on its Price-To-Earnings Ratio (65.4x) compared to the US Entertainment industry average (23.7x)

Price to Earnings Ratio vs Fair Ratio

What is DIS's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

DIS PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	65.4x
Fair PE Ratio	39.8x

Price-To-Earnings vs Fair Ratio: DIS is expensive based on its Price-To-Earnings Ratio (65.4x) compared to the estimated Fair Price-To-Earnings Ratio (39.8x).

Share Price vs Fair Value

What is the Fair Price of DIS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: DIS ($97.18) is trading below our estimate of fair value ($228.07)

Significantly Below Fair Value: DIS is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: DIS is poor value based on its PEG Ratio (2.2x)

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Future Growth

How is Walt Disney forecast to perform in the next 1 to 3 years based on estimates from 28 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

29.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: DIS's forecast earnings growth (29.9% per year) is above the savings rate (1.9%).

Earnings vs Market: DIS's earnings (29.9% per year) are forecast to grow faster than the US market (12.8% per year).

High Growth Earnings: DIS's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: DIS's revenue (8.3% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: DIS's revenue (8.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: DIS's Return on Equity is forecast to be low in 3 years time (11.8%).

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Past Performance

How has Walt Disney performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-37.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DIS has high quality earnings.

Growing Profit Margin: DIS became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: DIS's earnings have declined by 37.3% per year over the past 5 years.

Accelerating Growth: DIS has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: DIS has become profitable in the last year, making it difficult to compare its past year earnings growth to the Entertainment industry (0.3%).

Return on Equity

High ROE: DIS's Return on Equity (3.1%) is considered low.

Discover strong past performing companies

Financial Health

How is Walt Disney's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: DIS's short term assets ($31.4B) exceed its short term liabilities ($29.6B).

Long Term Liabilities: DIS's short term assets ($31.4B) do not cover its long term liabilities ($68.8B).

Debt to Equity History and Analysis

Debt Level: DIS's net debt to equity ratio (37.3%) is considered satisfactory.

Reducing Debt: DIS's debt to equity ratio has increased from 45.9% to 50% over the past 5 years.

Debt Coverage: DIS's debt is not well covered by operating cash flow (10.9%).

Interest Coverage: DIS's interest payments on its debt are well covered by EBIT (4.2x coverage).

Balance Sheet

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Dividend

What is Walt Disney current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.11%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate DIS's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate DIS's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if DIS's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if DIS's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: DIS is not paying a notable dividend for the US market.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as DIS has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure

CEO

Bob Chapek (62 yo)

2.42yrs

Tenure

US$32,464,293

Compensation

Mr. Robert A. Chapek, also known as Bob, has been the Chief Executive Officer of Walt Disney Company since February 24, 2020 and has been its Director since April 14, 2020. He served as Chairman of Disney...

CEO Compensation Analysis

Compensation vs Market: Bob's total compensation ($USD32.46M) is above average for companies of similar size in the US market ($USD13.41M).

Compensation vs Earnings: Insufficient data to compare Bob's compensation with company performance.

Leadership Team

Experienced Management: DIS's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.

Board Members

Experienced Board: DIS's board of directors are considered experienced (4.5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/05 00:00
End of Day Share Price	2022/07/05 00:00
Earnings	2022/04/02
Annual Earnings	2021/10/02