Insights

• Disney exhibits strong profitability metrics, with gross profit, net profit, and EBITDA margins significantly exceeding industry averages.
• While revenue is growing, the company faces liquidity challenges, as indicated by current and quick ratios below industry benchmarks.
• Disney maintains a conservative capital structure, demonstrated by a low debt-to-equity ratio compared to its peers.
• The company's strategic investments in long-term assets and capital expenditures are expected to drive future growth, but require careful monitoring for efficient capital allocation.
• Unusual expenses and fluctuations in working capital introduce volatility in net income and cash flow, necessitating vigilant risk management.

Analysis

• Revenue - Sales/revenue is trending upward, indicating growth in the company's top line. - The company has experienced positive revenue growth in 4 of the last 8 quarters. - The most recent trailing twelve month YoY growth and 5-Year CAGR are similar, suggesting stable revenue growth.
  • Profitability
    • Gross profit margin, net profit margin, and EBITDA margin are all above the industry average, indicating strong profitability.
    • Net income shows significant volatility but an overall upward trend, reflecting improved bottom-line performance.
    • The company has been able to maintain good expense control, as evidenced by the stable trend in operating expenses.
  • Liquidity
    • The current ratio and quick ratio are below the industry average, suggesting potential liquidity issues.
    • The company may have difficulty meeting its short-term obligations.
    • The trends for the current ratio and quick ratio are slightly decreasing, which could exacerbate liquidity concerns.
  • Solvency
    • The total debt to total equity ratio is significantly below the industry average, indicating that the company is not highly leveraged.
    • The debt / EBITDA is also below the industry average, suggesting that the company has a good ability to cover its debt with its earnings.
    • The trend for the total debt to total equity ratio is decreasing, which is a positive sign for solvency.
  • Operational Efficiency
    • Increasing receivables and inventories need monitoring for efficient asset utilization.
    • The company's ability to control operating expenses in relation to revenue growth is a positive sign.
    • The enterprise value to EBITDA and enterprise value to sales are below the industry average.
  • Cash Flow Analysis - Net income growth is a primary driver of operating cash flow, but volatility in working capital can offset these gains. - Increasing capital expenditures reflect investments in theme parks, streaming platforms, and content creation. - Debt management activities impact financing cash flow, with periods of debt issuance and repayment.
  • Risk Factors
    • The low current ratio indicates a need to improve short-term liquidity.
    • Volatility in net income due to unusual expenses needs to be monitored.
    • Macroeconomic conditions, technological changes, regulatory risks, and legal/litigation matters pose substantial threats to the company's operations and financial performance.
  • Future Outlook
    • Continued monitoring of the current ratio is crucial to ensure short-term obligations can be met.
    • Strategic investments in long-term assets should be evaluated for their potential to generate future returns.
    • Maintaining a balanced capital structure with increasing equity and decreasing debt will support financial stability.

Benchmarks (as of 2025-03-14)

• Performance Comparison:
  • The Walt Disney Co. (DIS) has consistently underperformed The Communication Services Select Sector SPDR Fund (XLC) across all time periods analyzed. For instance, over the past year, DIS has returned -12.57% compared to XLC's 20.67%, a significant underperformance of -33.24%. Over a three-year period, DIS has returned -28.82% compared to XLC's 45.83%, a difference of -74.65%. The trend indicates that DIS has struggled to keep pace with the broader communication services sector, as represented by XLC.
• Risk and Return Analysis:
  • The annualized returns for DIS are notably lower than those of XLC. Over the past year, DIS has an annualized return of -12.57%, while XLC has 20.67%. The annualized volatility for DIS has generally been higher than XLC, indicating that DIS is not only providing lower returns but also experiencing greater fluctuations in its returns. For example, in Q4 2022, DIS reached volatility levels as high as 56.53%, while XLC peaked at 39.14%. The maximum drawdown for DIS was -58.87% on 10/04/2023 and 10/27/2023, significantly higher than XLC's maximum drawdown of -46.65% on 11/03/2022. This suggests that DIS carries a higher risk profile compared to XLC.
• Risk-Adjusted Performance:
  • The Sharpe Ratio for DIS is consistently lower than that of XLC, indicating that DIS offers a less favorable risk-adjusted return. As of Q1 2025, the Sharpe ratio for DIS is -0.38, while the Sharpe ratio for XLC is 1.39. This means that for each unit of risk taken, XLC provides a higher return compared to DIS. The beta value for DIS has decreased over time and is now lower than that of XLC. As of Q1 2025, DIS has a beta between 0.45 and 0.61, while XLC has a beta between 0.85 and 0.95. This suggests that DIS has become less sensitive to market movements compared to XLC.
• Overall Assessment:
  • Based on the data, The Walt Disney Co. (DIS) has underperformed The Communication Services Select Sector SPDR Fund (XLC) across various metrics, including historical performance, annualized returns, and risk-adjusted returns. DIS exhibits higher volatility and larger drawdowns, indicating a riskier investment profile compared to XLC. The decreasing beta of DIS suggests a changing sensitivity to market movements. Overall, XLC appears to offer a more stable and higher-returning investment option compared to DIS, based on the analyzed data.

Peers Price History(as of 2025-03-14)

• Performance Comparison:
  • The Walt Disney Co. (DIS) has shown mixed performance compared to its peers, Comcast Corp. (CMCSA) and Warner Bros. Discovery, Inc. (WBD). Over the past year, DIS has underperformed WBD, with returns of -12.57% compared to WBD's 20.17%. However, DIS has outperformed CMCSA over the same period, as CMCSA returned -15.22%. Looking at a longer timeframe, DIS has outperformed both CMCSA and WBD over the past two years, with returns of 5.98% compared to CMCSA's 3.19% and WBD's -28.44%. Over the past three years, DIS has underperformed CMCSA, returning -28.82% compared to CMCSA's -17.51%, but outperformed WBD, which returned -61.2%.
• Risk and Return Analysis:
  • The annualized returns show that DIS has provided lower returns than WBD over the past year (-12.57% vs 20.17%) but higher returns than CMCSA (-12.57% vs -15.22%). Over a two-year period, DIS has outperformed both peers (2.95% vs 1.58% for CMCSA and -15.41% for WBD). Over three years, DIS has underperformed CMCSA (-10.72% vs -6.22%) but outperformed WBD (-10.72% vs -27.06%). The annualized volatility data indicates that WBD is generally the most volatile, while CMCSA is the least volatile. DIS's maximum drawdown of -58.87% is less severe than WBD's -91.32% but more severe than CMCSA's -52.11%, indicating a moderate risk profile.
• Risk-Adjusted Performance:
  • The Sharpe Ratio data suggests that CMCSA has generally offered better risk-adjusted returns compared to DIS and WBD. DIS's Sharpe Ratios have often been negative, indicating that its returns have not adequately compensated for the level of risk taken. The beta values indicate that DIS's sensitivity to market movements is close to the market average (beta around 1), while CMCSA is less sensitive (beta below 1) and WBD is more sensitive (beta above 1).
• Overall Assessment:
  • DIS has shown mixed performance compared to its peers. While it has outperformed CMCSA in some periods, it has generally underperformed WBD. DIS's risk profile is moderate, with a beta close to 1 and a maximum drawdown between that of CMCSA and WBD. CMCSA appears to offer better risk-adjusted returns based on its higher Sharpe Ratios and lower volatility. WBD is the riskiest of the three, with high volatility and a large maximum drawdown.

Peers Fundamentals(as of 2024-12-31)

1. Market Position and Size:

   • The Walt Disney Co. (DIS) holds the largest market capitalization among its peers at $178,320.41 million, surpassing Comcast Corp. (CMCSA) at $133,961.69 million and Warner Bros. Discovery, Inc. (WBD) at $25,014.0 million.
   • While DIS's revenue of $92,088 million is less than CMCSA's $123,731 million, it significantly exceeds WBD's $39,277 million. Similarly, DIS's EBITDA of $17,709 million is lower than CMCSA's $38,098 million but higher than WBD's $7,296 million.
   • DIS's leading market capitalization suggests a strong market presence, although its revenue and EBITDA are not the highest among its peers.

2. Profitability and Efficiency:

   • DIS exhibits a Gross Profit Margin of 31.05%, which is lower than CMCSA's 58.11% but higher than WBD's 23.58% and the industry average of 9.86%.
   • Its EBITDA Margin of 19.23% is also lower than CMCSA's 30.79% but higher than WBD's 18.58% and the industry average of -22.13%.
   • DIS's Net Profit Margin of 6.1% is less than CMCSA's 13.08% but significantly better than WBD's -28.8% and the industry average of -90.59%.
   • DIS demonstrates strong profitability compared to the industry average, but its margins are generally lower than those of CMCSA.

3. Financial Health and Stability:

   • DIS's Current Ratio of 0.65 and Quick Ratio of 0.59 are lower than CMCSA's 0.68 and 0.89, WBD's 0.89 and 0.89, and the industry averages of 1.22 and 1.21, respectively, indicating potential liquidity concerns.
   • However, DIS's Total Debt to Total Equity Ratio of 44.45 is significantly lower than CMCSA's 123.2, WBD's 126.35, and the industry average of 972.65, suggesting better solvency.
   • DIS's Debt / EBITDA ratio of 2.56 is also lower than CMCSA's 2.6, WBD's 5.48, and the industry average of 5.26, further supporting its strong solvency position.

4. Valuation and Market Perception:

   • DIS's Enterprise Value To Sales ratio of 2.69 is higher than CMCSA's 1.96 but slightly lower than the industry average of 2.81.
   • Its Enterprise Value To EBITDA ratio of 13.97 is higher than CMCSA's 6.21 but lower than the industry average of 16.2.
   • DIS's Price To Earnings ratio of 32.03 is significantly higher than CMCSA's 8.55 but lower than the industry average of 40.71.
   • DIS's Price to Book Ratio of 1.84 is higher than CMCSA's 1.57 and WBD's 0.73 but lower than the industry average of 7.93.
   • DIS's Price To Sales Ratio of 1.95 is higher than CMCSA's 1.12 and WBD's 0.64, as well as the industry average of 1.6.
   • DIS's valuation metrics suggest that the market values it higher than its peers, but its P/E and EV/EBITDA ratios are lower than the industry average.

5. Cash Flow and Capital Management:

   • DIS's Net Operating Cash Flow of $14,991 million is less than CMCSA's $27,673 million but greater than WBD's $5,375 million.
   • Its Total Capital Expenditure of $6,579 million is less than CMCSA's $15,130 million but greater than WBD's $948 million.
   • DIS's Free Cash Flow of $8,412 million is less than CMCSA's $12,543 million but greater than WBD's $4,427 million.
   • DIS generates less cash flow than CMCSA but more than WBD, and its capital expenditures are also lower than CMCSA's.

6. Growth and Future Prospect:

   • DIS's average Sales/Revenue growth of 5.21% is lower than the peer average of 16.31%.
   • However, DIS's average EBITDA growth of 13.23% is higher than the peer average of 9.57%.
   • DIS's average EBIT Margin growth of 74.36% is significantly higher than the peer average of -2.88%.
   • DIS's Free Cash Flow growth shows significant fluctuations, with a standard deviation of 3731.93%.
   • DIS's most recent year-over-year growth rates are lower than its 5-year CAGRs for Free Cash Flow and Free Cash Flow Margin, indicating a deceleration trend.
   • DIS's growth is concentrated in profitability metrics (EBITDA, EBIT Margin) and Free Cash Flow, while revenue growth is lagging.

7. Potential for Investment:

   • DIS presents a mixed investment profile. Its strong brand and market position, coupled with solid profitability and solvency, make it an attractive investment.
   • However, its lower liquidity, lagging revenue growth, and decelerating free cash flow growth raise concerns.
   • Investors should carefully weigh these factors before making an investment decision.

8. Key Risks and Considerations:

   • DIS's lower liquidity ratios compared to its peers and the industry average pose a potential risk.
   • Its lagging revenue growth compared to its peers is also a concern.
   • The deceleration in Free Cash Flow and Free Cash Flow Margin growth rates is a potential red flag.

9. Overall Assessment:

   • DIS demonstrates a mixed financial health profile. It holds a dominant market position with the highest market capitalization and exhibits strong solvency with a low Debt/EBITDA ratio.
   • However, its liquidity ratios are weak, and revenue growth lags behind peers. Profitability metrics are generally strong, but there are concerns about the sustainability of free cash flow growth.
   • DIS holds a leading competitive position due to its high market capitalization and strong brand recognition. While its revenue is less than Comcast, its profitability metrics are generally better than Warner Bros. Discovery. However, its lower liquidity and lagging revenue growth compared to peers are areas of concern.