Key takeaways
View moreDisney appears moderately undervalued based on its strong financial performance relative to industry averages, lower valuation multiples compared to peers, and significant growth opportunities in streaming and international markets. While liquidity concerns and competitive pressures exist, the company's strong brand, diversified business model, and potential catalysts for growth suggest that the current valuation does not fully reflect its long-term potential.
- Disney's gross and net profit margins significantly exceed industry averages, demonstrating strong profitability and efficient revenue generation. (Gross Profit Margin: 31.36% vs. Industry Average: 9.67%; Net Profit Margin: 13.93% vs. Industry Average: -85.70%)
- Liquidity is a concern, with current and quick ratios below 1, indicating potential difficulties in meeting short-term obligations. (Current Ratio: 0.64; Quick Ratio: 0.58)
- The company's debt-to-equity ratio is lower than the industry average, suggesting lower financial leverage and better long-term solvency. (Debt to Equity Ratio: 41.11% vs. Industry Average: 1568.85%)
- Strategic initiatives, such as the announcement of Disneyland Abu Dhabi and investments in domestic theme parks, present significant growth opportunities.
- Recent positive price momentum and raised EPS guidance to $5.75 suggest a potential turnaround, but long-term performance depends on managing risks and capitalizing on growth opportunities.
- The Experiences segment is a key growth driver, with domestic parks performing strongly and driving overall company growth, as highlighted in the Q2 2025 earnings call.
- Disney is actively working to improve its streaming business through bundling, technology enhancements, and content investments, indicating a commitment to long-term growth in this area.
- The company faces ongoing legal matters, including a securities class action lawsuit, which could have material financial impacts, as noted in the SEC filings summary.
- Disney's Enterprise Value to EBITDA and Sales ratios are lower than industry averages, suggesting potential undervaluation. (EV/EBITDA: 11.94 vs. Industry Average: 17.67; EV/Sales: 2.34 vs. Industry Average: 2.96)
- Recent news and events, such as the announcement of Disneyland Abu Dhabi and the focus on improving the streaming business, have generated positive market sentiment.
Evaluation summary
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Company Overview:
- The Walt Disney Co. (DIS) is a global entertainment and media enterprise, operating through three main segments: Disney Entertainment, ESPN, and Disney Parks, Experiences, and Products.
- Key products and services include film and television content, direct-to-consumer (DTC) streaming services (Disney+, Hulu, ESPN+), theme park admissions, resort stays, consumer products, and live sports programming. The company's description highlights its focus on international family entertainment.
- The company's peers used for comparative analysis include Comcast Corp. (CMCSA) and Warner Bros. Discovery, Inc. (WBD). The Communication Services Select Sector SPDR Fund (XLC) is used as a benchmark.
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Financial Performance:
- Disney's revenue has shown a generally increasing trend over the past four quarters, from $22.449 billion in 2024-09-30 to $23.504 billion in 2025-03-31. The highest revenue in the last four quarters was $24.602 billion in 2024-12-31.
- Net income has fluctuated, with a low of $460 million in 2024-09-30 and a high of $3.401 billion in 2025-03-31.
- The gross profit margin has remained relatively stable, ranging from 30.88% to 32.19% over the last four quarters. As of 2025-03-31, the gross profit margin was 31.36%, significantly higher than the industry average of 9.67%.
- The net profit margin has varied significantly, from 2.05% in 2024-09-30 to 13.93% in 2025-03-31. The net profit margin of 13.93% is substantially higher than the industry average of -85.70%.
- Return on Average Assets (ROA) as of 2025-03-31 was 4.56%, Return on Average Total Equity (ROE) was 8.75%, and Return on Average Invested Capital (ROIC) was 6.37%. These figures are all higher than the industry averages of -8.10%, -46.34%, and -16.75%, respectively, indicating Disney's superior efficiency in utilizing its assets and equity to generate profits.
- The Q2 2025 earnings call highlighted a 20% year-over-year increase in adjusted EPS, contributing to a solid first half of fiscal 2025.
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Operational Efficiency:
- Total current assets decreased from $23.501 billion in 2024-06-30 to $21.672 billion in 2025-03-31. Total current liabilities also decreased slightly from $35.612 billion to $34.029 billion over the same period.
- Working capital has remained negative, improving slightly from -$12.111 billion in 2024-06-30 to -$12.357 billion in 2025-03-31.
- Net operating cash flow has shown improvement, increasing from $2.602 billion in 2024-06-30 to $6.753 billion in 2025-03-31.
- Free cash flow to equity has also increased, from $1.237 billion in 2024-06-30 to $4.891 billion in 2025-03-31, indicating improved cash generation.
- Total capital expenditure was $1.862 billion as of 2025-03-31. Depreciation, depletion, and amortization were $1.324 billion.
- Cash dividends paid were $905 million as of 2025-03-31.
- The current ratio is 0.64 as of 2025-03-31, and the quick ratio is 0.58, both below the industry averages of 1.04 and 1.03, respectively, indicating potential liquidity concerns.
- The total debt to total equity ratio is 41.11% as of 2025-03-31, lower than the industry average of 1568.85%, suggesting lower financial leverage.
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Growth Opportunities:
- Disney is focusing on market expansion through initiatives like the announcement of Disneyland Abu Dhabi, blending Disney stories with Emirati culture.
- The company is investing over $30 billion in theme parks in Florida and California to enhance offerings and create jobs.
- Strategic priorities include building for the future and driving growth through four key areas, leading to strong Q2 results.
- The company is also focused on improving its streaming business through bundling, technology enhancements, and content investments.
- International expansion is a priority, with the deployment of a cruise ship in Singapore.
- The company is shifting its focus towards higher-quality content, particularly for Marvel, to improve performance and brand perception.
- The Q2 2025 earnings call highlighted the upcoming theatrical slate, including titles from Marvel, Pixar, and Walt Disney Animation Studios.
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Recent Developments and Market Sentiment:
- The announcement of Disneyland Abu Dhabi and the investment in domestic theme parks have generated positive market sentiment.
- The focus on improving the streaming business and shifting towards higher-quality content for Marvel also contribute to a positive outlook.
- The advertising market is healthy, especially for live sports, providing a positive outlook for Disney's advertising revenue.
- The company's strategic focus on building its DTC streaming capabilities, including Disney+, Hulu, and ESPN+, is a critical priority.
- Management raised the full-year EPS guidance to $5.75, indicating confidence in continued performance.
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Risks and Threats:
- Key risks include intense competition in the media and entertainment industry, including for content, talent, and advertising revenue.
- Risks related to the success and profitability of the company's DTC streaming services.
- Exposure to macroeconomic conditions, such as recessions, inflation, and foreign exchange fluctuations.
- Regulatory risks, including around data privacy, content requirements, and antitrust enforcement.
- Risks related to the acquisition of NBCU's interest in Hulu, including potential additional payments.
- Cybersecurity and data breach risks that could disrupt operations and damage reputation.
- Ongoing legal matters, including a securities class action lawsuit alleging misstatements and omissions regarding Disney+ costs and subscriber growth.
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Valuation Analysis:
- The Enterprise Value to EBITDA ratio is 11.94 as of 2025-03-31, lower than the industry average of 17.67.
- The Enterprise Value to Sales ratio is 2.34, also lower than the industry average of 2.96.
- These ratios suggest that Disney may be undervalued compared to its peers.
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Price Performance:
- Disney's stock price has shown significant volatility. From March 21, 2025, to May 16, 2025, the price increased from $99.46 to $113.42.
- There was a notable drop in early April, with the price falling to $81.72 on April 8, 2025, before recovering.
- The stock price jumped significantly after the Q2 2025 earnings report on May 7, 2025, from $92.17 to $102.09.
- Over the past three years, DIS has underperformed The Communication Services Select Sector SPDR Fund (XLC), with returns of 12.11% versus XLC at 80.8%. However, in the past month and three months, DIS has outperformed XLC, with returns of 35.02% and 2.6% respectively, compared to XLC's 15.42% and -2.27%.
- Compared to peers like Comcast (CMCSA) and Warner Bros. Discovery (WBD), DIS has shown mixed performance, outperforming over three years but underperforming WBD over the past year.
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Future Outlook:
- Management raised the full-year EPS guidance to $5.75, indicating confidence in continued performance.
- Long-term guidance, including double-digit earnings growth in fiscal years 2026 and 2027, remains intact.
- The company anticipates continued growth in the Experiences segment and improvements in the streaming business.
- The Q2 2025 earnings call highlighted the upcoming theatrical slate, including titles from Marvel, Pixar, and Walt Disney Animation Studios.
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Summary:
- Disney exhibits strong profitability and solvency but faces liquidity concerns. The company's strategic initiatives, particularly in streaming and international expansion, present growth opportunities.
- Strengths: Strong brand recognition, diversified business segments, high gross and net profit margins compared to industry averages, and improving cash flow.
- Weaknesses: Low current and quick ratios indicating liquidity issues, negative working capital, and reliance on the success of streaming services.
- Opportunities: Expansion in international markets (e.g., Disneyland Abu Dhabi), growth in the Experiences segment, and improvements in the streaming business.
- Threats: Intense competition in the media and entertainment industry, macroeconomic conditions, regulatory risks, and ongoing legal matters.
- Disney's financial health is generally strong, with improving profitability and cash flow. However, liquidity needs to be monitored.
- Critical factors for future performance include the success of streaming initiatives, effective cost management, and the ability to navigate regulatory and competitive challenges.
- Areas requiring further monitoring include liquidity ratios, the performance of streaming services, and the outcome of ongoing legal matters.
- Overall, Disney presents a mixed investment profile. The company's strong brand and diversified business provide a solid foundation, but liquidity concerns and competitive pressures need to be carefully considered. The recent positive price momentum and raised EPS guidance suggest a potential turnaround, but long-term performance will depend on effectively managing risks and capitalizing on growth opportunities.
Price history
Fundamentals
Insights
- Disney demonstrates strong profitability, with net profit margins and returns on assets and equity significantly exceeding industry averages.
- The company exhibits good long-term solvency, characterized by a lower debt-to-equity ratio compared to its peers.
- Liquidity is a potential concern, as indicated by current and quick ratios below 1, suggesting challenges in meeting short-term obligations.
- Strategic investments in theme parks and cruise lines are expected to drive future growth in assets and revenue.
- Effective cost management and operational efficiency contribute to enhanced profitability and cash flow generation.
Analysis
- Revenue
- Revenue has shown a general increasing trend, indicating successful business strategies and market demand.
- The 3-year CAGR is greater than the 5-year CAGR, suggesting growth acceleration, but the recent YoY growth is less than the 5-year CAGR, indicating a potential deceleration.
- The gross profit margin is significantly greater than the industry average, reflecting effective revenue generation.
- Profitability
- Net income has demonstrated significant growth, reflecting enhanced profitability.
- The net profit margin is significantly greater than the industry average, demonstrating a strong ability to generate profit relative to sales.
- Return on average assets, equity, and invested capital are all greater than the industry averages, indicating effective use of resources to generate profits.
- Liquidity
- The current and quick ratios are below 1, suggesting a limited capacity to meet short-term obligations.
- This is a potential area of concern that needs to be monitored.
- Solvency
- The total debt to total equity ratio is significantly lower than the industry average, indicating lower financial leverage and better long-term solvency.
- The debt/EBITDA ratio is also lower than the industry average, further supporting the assessment of good long-term solvency.
- Operational Efficiency
- The gross profit margin indicates effective utilization of assets to generate revenue.
- Increasing EBIT and EBITDA suggest improved operational efficiency.
- Cash Flow Analysis - Net operating cash flow is increasing, indicating improved cash generation from core business activities. - Free cash flow margin has improved, indicating better cash generation relative to revenue.
- Risk Factors
- The low current and quick ratios indicate potential liquidity issues.
- Volatility in net income and changes in working capital can impact operating cash flow.
- Future Outlook
- Continued investment in theme parks and cruise lines should drive further increases in net property, plant, and equipment.
- Maintaining a balanced capital structure with decreasing debt and increasing equity will support long-term financial stability.
- Monitoring key metrics such as revenue growth rates, gross margins, operating margins, operating cash flow, free cash flow, and capital expenditure is crucial.
- Profitability
Financial statements
Public filings
- Walt Disney Co (The) is navigating a rapidly evolving media and entertainment landscape, with the shift towards DTC streaming services and declining linear TV viewership posing both challenges and opportunities.
- The company's strategic focus on building its DTC streaming capabilities, including Disney+, Hulu, and ESPN+, is a critical priority, though these services have experienced losses thus far and face intense competition.
- Macroeconomic conditions, such as recessions, inflation, and foreign exchange fluctuations, pose significant risks that could impact consumer demand and the company's costs.
- Regulatory changes around data privacy, content requirements, and antitrust enforcement present compliance risks that the company must manage.
- The company faces various legal matters, including a securities class action lawsuit, antitrust lawsuits, and an arbitration with NBCU over the Hulu acquisition, which could result in material financial impacts.
- Despite these risks and challenges, the company maintains a strong financial position and continues to invest in its core businesses, including theme parks, cruise lines, and content production, to drive long-term growth.
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Core Business and Operations:
- The Walt Disney Company is a diversified worldwide entertainment company with operations in three main segments: Entertainment, Sports, and Experiences.
- The Entertainment segment encompasses the company's non-sports focused global film and television content production and distribution activities, including linear networks, direct-to-consumer streaming services, and content sales/licensing.
- The Sports segment encompasses the company's sports-focused global television and DTC video streaming content production and distribution activities, primarily through ESPN.
- The Experiences segment encompasses the company's theme parks, resorts, cruise line, consumer products, and other experiences.
- Key products and services include film/TV content, DTC streaming services, theme park admissions, resort stays, consumer products, and live sports programming.
- Major competitors include other media/entertainment conglomerates, streaming services, theme park operators, and consumer product companies.
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Industry and Market Trends:
- The media and entertainment industry is highly competitive, with evolving consumer preferences, technological changes, and regulatory pressures impacting traditional business models.
- The shift towards DTC streaming services and declining linear TV viewership is a major industry trend, requiring significant investment and strategic adaptation.
- Regulatory changes around data privacy, content requirements, and antitrust enforcement pose compliance risks.
- Macroeconomic conditions, such as recessions, inflation, and foreign exchange fluctuations, can significantly impact consumer demand and costs.
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Recent Events:
- Completed the Star India Transaction, forming a joint venture with Reliance Industries Limited for the company's Star-branded entertainment and sports channels in India.
- Announced plans to combine certain Hulu Live TV assets with fuboTV Inc., a virtual MVPD, in which Disney will have a 70% controlling interest.
- Reached a $220 million settlement with fuboTV related to antitrust claims.
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Risk Factors:
- Intense competition in the media/entertainment industry, including for content, talent, and advertising revenue.
- Risks related to the success and profitability of the company's DTC streaming services.
- Exposure to macroeconomic conditions, such as recessions, inflation, and foreign exchange fluctuations.
- Regulatory risks, including around data privacy, content requirements, and antitrust enforcement.
- Risks related to the acquisition of NBCU's interest in Hulu, including potential additional payments.
- Cybersecurity and data breach risks that could disrupt operations and damage reputation.
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Legal Matters:
- Ongoing securities class action lawsuit alleging misstatements and omissions regarding Disney+ costs and subscriber growth.
- Consolidated antitrust lawsuits alleging anticompetitive practices in licensing networks to vMVPDs.
- Arbitration with NBCU regarding the appraisal process for determining Hulu's equity fair value.
- Various other legal actions involving copyright, breach of contract, and other claims.
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Management's Discussion and Analysis:
- Revenues increased 5% in the most recent quarter, driven by higher subscription and theatrical distribution revenue, as well as growth in theme park and resort revenues.
- Operating income increased, primarily due to improved results in the Entertainment segment.
- The company continues to invest significantly in its DTC streaming services, which have experienced losses but are expected to drive long-term growth.
- Capital expenditures are expected to increase in fiscal 2025, primarily due to continued investment in cruise ship fleet expansion and new guest offerings at theme parks.
- The company has a strong financial position, with adequate liquidity and access to capital markets to fund operations and investments.
Earnings calls
Earnings Report 2025Q2 (2025-05-07)
Key takeaways
- Experiences Segment is a Key Growth Driver: The Experiences segment, particularly domestic parks, is performing strongly and driving overall company growth, making it a critical area of focus for investors.
- Streaming Strategy is Evolving: Disney is actively working to improve its streaming business through bundling, technology enhancements, and content investments, indicating a commitment to long-term growth in this area.
- International Expansion is a Priority: The announcement of Disneyland Abu Dhabi and the deployment of a cruise ship in Singapore demonstrate Disney's focus on expanding its reach to international markets.
- Content Quality over Quantity: Disney is shifting its focus towards higher-quality content, particularly for Marvel, suggesting a strategic adjustment to improve performance and brand perception.
- Advertising Market Remains Robust: Despite concerns about the consumer environment, the advertising market is healthy, especially for live sports, providing a positive outlook for Disney's advertising revenue.
Focus of management’s prepared remarks
- Disneyland Abu Dhabi: Announcement of a new Disney theme park in Abu Dhabi, blending Disney stories with Emirati culture, with Disney overseeing design, IP licensing, and operational expertise.
- Domestic Theme Park Investment: Commitment to invest over $30 billion in theme parks in Florida and California to enhance offerings, create jobs, and support the U.S. economy.
- Strategic Priorities: Emphasis on building for the future and driving growth through four strategic priorities, leading to strong Q2 results with adjusted EPS up 20%.
- Experiences Segment Performance: Highlighted the strong performance of the Experiences segment, driven by domestic businesses, with returns on invested capital at all-time highs.
- Entertainment Business Growth: Noted the continued strong growth in the Entertainment business, including movies, television series, news, and sports.
- Upcoming Theatrical Slate: Expressed excitement about the upcoming theatrical slate, including titles from Marvel, Pixar, and Walt Disney Animation Studios.
- ESPN Viewership: Highlighted healthy sports viewership trends, with ESPN's Q2 primetime audience up 32%, driven by NFL, college football, and the NCAA Women's Basketball Tournament.
- Streaming as a Key Priority: Reaffirmed that streaming remains a key priority and a core growth platform for Disney, with improvements in the product to enhance user experience, increase engagement, and reduce churn.
Focus of the analyst Q&A
- Streaming Strategy:
- The impact of integrating Hulu content and sports into Disney+ on engagement, sign-ups, and churn.
- Future plans to drive growth in the streaming business, including bundling strategies and technology improvements.
- Experiences Segment Performance and Outlook:
- Factors contributing to margin improvement in domestic parks.
- Sustainability of double-digit operating income growth in fiscal year 2026.
- Demand environment in the U.S. and any changes from the previous quarter.
- Impact of softness in demand in China on international park performance.
- Disneyland Abu Dhabi:
- Rationale for selecting Abu Dhabi as the location and the Miral Group as the partner.
- Target audience and suitability of the location for those purposes.
- Financial structure of the deal, specifically regarding ownership and royalties.
- Upcoming Theatrical Slate:
- Excitement for the upcoming theatrical slate and its potential to generate long-term value for Disney.
- Confidence in Marvel's ability to be a significant driver of the Disney flywheel with a renewed focus on theatrical releases.
- Advertising Market:
- Current trends in the advertising market and outlook for the Upfront.
- Impact of the move to programmatic advertising on Disney's market share.
- Reasons for lower advertising revenue in Disney+.
- ESPN DTC Launch:
- Programming approach for the ESPN flagship service, including the critical mass of sports rights and shoulder programming.
- Strategy for integrating features like betting and fantasy while preserving the multichannel ecosystem.
- Cruise Line Performance:
- Key learnings from the Disney Treasure launch and how they inform expectations for upcoming cruise ships.
- International Visitation to Domestic Parks:
- Trends in international visitation to domestic parks and any recent changes.
- Capital Allocation:
- Whether the $30 billion expansion capital for Florida and California will enable more people to visit the parks.
- How the company thinks about incremental return on capital on expansions in the experiences segment.
Summary
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Financial Performance
The Walt Disney Company reported a strong Q2 2025, with adjusted EPS up 20% year-over-year. This performance contributed to a solid first half of fiscal 2025. The Experiences segment delivered particularly strong results, driven by domestic businesses. The company raised its full-year EPS guidance from $5.30 to $5.75, indicating confidence in continued performance.
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Revenue Drivers
The Experiences segment, particularly domestic parks and resorts, was a significant revenue driver. The Entertainment business, including movies, television series, news, and sports, also contributed to revenue growth. Strong box office performance of feature films and healthy sports viewership trends, especially for ESPN, supported revenue generation. Streaming revenue is also growing, driven by an expansive portfolio of high-quality content and programming.
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Profit Margins and Cost Management
Domestic park margins increased by 110 basis points in the quarter. Cruise line performance was margin accretive. The company is focused on improving the technology side of the streaming business, including paid sharing, personalization, customization, and ad-tech, to enhance user experience and reduce churn. They are also investing in local content outside the United States. Cost management strategies are expected to contribute to operating leverage in the streaming business.
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Guidance and Outlook
The company raised its full-year EPS guidance to $5.75. Long-term guidance, including double-digit earnings growth in fiscal years 2026 and 2027, remains intact. Management expressed optimism about the outlook for the rest of the fiscal year, citing strong bookings at Walt Disney World and a robust advertising market. They anticipate continued growth in the Experiences segment and improvements in the streaming business.
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Strategic Initiatives
A major strategic initiative is the expansion of the Experiences segment with the announcement of Disneyland Abu Dhabi. The company is investing over $30 billion in theme parks in Florida and California. Another key initiative is the launch of ESPN's direct-to-consumer product offering. The company is focused on bundling Disney+, Hulu, and ESPN DTC to enhance the user experience and drive growth in the streaming business. They are also improving the technology and content offerings of their streaming platforms.
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Management Commentary
Management expressed confidence in the company's direction and optimism about its outlook. The CEO highlighted the strength and resilience of the Experiences business and the potential for growth in the streaming business. He emphasized the importance of investing in content, technology, and international markets. Management believes that the company's expansive portfolio of high-quality content and programming will enable it to continue to grow revenue and profitability.
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Industry and Market Conditions
The company views the advertising market as healthy, particularly for live sports. They noted robust demand for advertising, especially from restaurants and healthcare. The Chinese consumer market is seen as somewhat challenged, impacting per capita spending at Shanghai Disney. The company believes that the Middle East represents a significant growth opportunity, with a large income-qualified population and increasing tourism.
Comparative analysis
Benchmarks (as of 2025-05-16)
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Performance Comparison:
- The Walt Disney Co. (DIS) has generally underperformed The Communication Services Select Sector SPDR Fund (XLC) across most time periods. Over the past three years, DIS has shown significantly lower returns compared to XLC. For instance, the 3-year performance shows DIS at 12.11% versus XLC at 80.8%. However, in the past month and three months, DIS has outperformed XLC, with returns of 35.02% and 2.6% respectively, compared to XLC's 15.42% and -2.27%. This recent outperformance may indicate a short-term recovery or shift in market sentiment towards DIS.
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Risk and Return Analysis:
- The annualized returns for DIS are consistently lower than those of XLC. The 3-year annualized return for DIS is 3.88%, while for XLC it is 21.82%. This suggests that XLC has provided better returns on an annualized basis over the long term.
- DIS has generally exhibited higher annualized volatility compared to XLC. For example, as of 2024-08-14, DIS had a volatility of 25.38% while XLC had a volatility of 19.51%. This indicates that DIS's returns have been more variable and subject to greater fluctuations.
- The maximum drawdown for DIS was -57.33% on 10/04/2023 and 10/27/2023, while for XLC it was -46.65% on 11/03/2022. This suggests that DIS carries a higher risk profile, with the potential for more significant losses from peak to trough.
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Risk-Adjusted Performance:
- The Sharpe ratios for XLC are generally higher than those for DIS, indicating that XLC has offered better risk-adjusted returns. As of Q2 2025, the Sharpe ratio for DIS is 0.49, while for XLC it is 1.24. This suggests that XLC provides a more favorable balance between risk and return.
- The beta values for DIS have fluctuated, trending from above 1 to below 1, indicating a changing sensitivity to market movements. As of Q2 2025, the beta for DIS is 0.96, while for XLC it is 0.86. This suggests that DIS is currently exhibiting slightly more market sensitivity than XLC.
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Overall Assessment:
- Based on the data, The Communication Services Select Sector SPDR Fund (XLC) has generally provided better risk-adjusted returns and more stable performance compared to The Walt Disney Co. (DIS). While DIS has shown recent outperformance in the past month and three months, its higher volatility, lower annualized returns, and larger drawdowns suggest a riskier investment profile. Investors seeking more stable and consistent returns may prefer XLC, while those with a higher risk tolerance and belief in DIS's potential for recovery may consider DIS.
Peers Price History(as of 2025-05-16)
- Performance Comparison:
- The Walt Disney Co. (DIS) has shown mixed performance compared to Comcast Corp. (CMCSA) and Warner Bros. Discovery, Inc. (WBD). Over the past three years, DIS has outperformed both CMCSA and WBD, with returns of 12.11% compared to -7.45% and -48.37%, respectively. However, over the past year, DIS has underperformed WBD, with returns of 11.22% compared to 13.23%. More recently, DIS has significantly outperformed both peers in the last month, posting a 35.02% return compared to CMCSA's 5.6% and WBD's 15.37%.
- Risk and Return Analysis:
- The annualized returns show that DIS has provided higher returns than CMCSA and WBD over the 2-year and 3-year periods. However, WBD has provided slightly higher returns over the past year. For example, DIS's 3-year annualized return is 3.88%, compared to CMCSA's -2.55% and WBD's -19.77%.
- The annualized volatility data indicates that WBD is significantly more volatile than DIS and CMCSA. For example, in Q2 2025, WBD's volatility ranged up to 101.04%, while DIS's ranged up to 65.12% and CMCSA's ranged up to 39.95%. This suggests that WBD is a riskier investment than DIS and CMCSA.
- The drawdown figures show that WBD has experienced the largest maximum drawdown of -79.37%, while DIS had a maximum drawdown of -57.33% and CMCSA had a maximum drawdown of -52.11%. This further supports the conclusion that WBD is the riskiest of the three.
- Risk-Adjusted Performance:
- The Sharpe Ratio data indicates that CMCSA generally offers better risk-adjusted returns than DIS and WBD. CMCSA's Sharpe ratio is consistently higher than DIS's and WBD's, suggesting that CMCSA provides a better balance between risk and return.
- The Beta values show that DIS and WBD are more sensitive to market movements than CMCSA. DIS's beta is generally around 1, while WBD's beta is consistently above 1. CMCSA's beta is generally below 1, indicating that it is less volatile than the market.
- Overall Assessment:
- Based on the analysis, CMCSA appears to be the most stable and least risky of the three companies, with lower volatility, smaller drawdowns, and a higher Sharpe ratio. DIS offers a balance between risk and return, with moderate volatility and drawdowns. WBD is the riskiest of the three, with high volatility, large drawdowns, and a lower Sharpe ratio. However, WBD has shown periods of high return, suggesting that it may be suitable for investors with a higher risk tolerance.
- Recent trends indicate that WBD's volatility is increasing, while DIS and CMCSA are becoming less volatile. This suggests that the market is becoming more uncertain about the future prospects of WBD.
Peers Fundamentals(as of 2025-03-31)
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Market Position and Size:
- The Walt Disney Company (DIS) stands out with the largest market capitalization of $203,900.8 million, significantly surpassing Comcast Corp. (CMCSA) at $132,471.83 million and Warner Bros. Discovery, Inc. (WBD) at $22,662.57 million.
- Despite its leading market capitalization, Disney's revenue of $93,601 million is less than Comcast's $123,560 million. This suggests that the market values Disney at a higher multiple of its revenue, possibly due to its brand strength and diverse business segments.
- Disney's EBITDA of $18,377 million and Net Income of $8,910 million are also lower than Comcast's $38,246 million and $15,709 million, respectively, indicating that while Disney has a strong market presence, its profitability metrics are not the highest among its peers.
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Profitability and Efficiency:
- Disney's Gross Profit Margin is 31.38%, which is greater than Warner Bros. Discovery (WBD) at 25.01% and the industry average of 9.67%, but less than Comcast (CMCSA) at 58.14%.
- Disney's EBITDA Margin is 19.63%, which is greater than Warner Bros. Discovery (WBD) at 18.95% and the industry average of -19.41%, but less than Comcast (CMCSA) at 30.95%.
- Disney's Net Profit Margin is 9.52%, which is greater than Warner Bros. Discovery (WBD) at -28.18% and the industry average of -85.7%, but less than Comcast (CMCSA) at 12.71%.
- Disney's Return on Average Assets is 4.56%, which is greater than Warner Bros. Discovery (WBD) at -9.75% and the industry average of -8.1%, but less than Comcast (CMCSA) at 5.91%.
- Disney's Return on Average Total Equity is 8.75%, which is greater than Warner Bros. Discovery (WBD) at -27.69% and the industry average of -46.34%, but less than Comcast (CMCSA) at 18.57%.
- Disney's Return on Average Total Capital is 8.8%, which is greater than Warner Bros. Discovery (WBD) at 0.7% and the industry average of -6.27%, but less than Comcast (CMCSA) at 12.4%.
- Disney's Return On Average Invested Capital is 6.37%, which is greater than Warner Bros. Discovery (WBD) at -14.23% and the industry average of -16.75%, but less than Comcast (CMCSA) at 8.66%.
- While Disney demonstrates better profitability and efficiency than WBD and the industry average, it underperforms compared to Comcast, suggesting that Comcast is more efficient in utilizing its assets and capital to generate profits.
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Financial Health and Stability:
- Disney's Current Ratio is 0.64, which is less than Warner Bros. Discovery (WBD) at 0.84 and the industry average of 1.04, and is approximately equal to Comcast (CMCSA) at 0.65.
- Disney's Quick Ratio is 0.58, which is less than Warner Bros. Discovery (WBD) at 0.84 and the industry average of 1.03, and is approximately equal to Comcast (CMCSA) at 0.65.
- Disney's Total Debt to Total Equity Ratio is 41.11, which is less than Comcast (CMCSA) at 114.41, Warner Bros. Discovery (WBD) at 110.61, and the industry average of 1568.85.
- Disney's Debt / EBITDA is 2.33, which is less than Comcast (CMCSA) at 2.59, Warner Bros. Discovery (WBD) at 5.16, and the industry average of 5.37.
- Disney's liquidity ratios are below the industry average, indicating potential short-term liquidity challenges. However, its debt levels are lower than its peers and the industry average, suggesting better solvency.
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Valuation and Market Perception:
- Disney's Enterprise Value To Sales is 2.34, which is greater than Comcast (CMCSA) at 1.87 and Warner Bros. Discovery (WBD) at 1.6, but less than the industry average of 2.96.
- Disney's Enterprise Value To EBITDA is 11.94, which is greater than Comcast (CMCSA) at 6.03 and Warner Bros. Discovery (WBD) at 8.43, but less than the industry average of 17.67.
- Disney's Price To Earnings is 23.17, which is greater than Comcast (CMCSA) at 8.71, but less than the industry average of 37.13.
- Disney's Price to Book Ratio is 1.96, which is greater than Comcast (CMCSA) at 1.53 and Warner Bros. Discovery (WBD) at 0.67, but less than the industry average of 9.86.
- Disney's Price To Sales Ratio is 2.2, which is greater than Comcast (CMCSA) at 1.09, Warner Bros. Discovery (WBD) at 0.59, and the industry average of 1.7.
- Disney's valuation metrics suggest that it is valued higher than its peers (CMCSA and WBD) in terms of sales, earnings, and book value. However, its valuation is generally lower than the industry average, indicating that the industry as a whole may be overvalued or that Disney is undervalued.
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Cash Flow and Capital Management:
- Disney's Net Operating Cash Flow is $18,078 million, which is less than Comcast (CMCSA) at $28,120 million, but greater than Warner Bros. Discovery (WBD) at $5,343 million.
- Disney's Total Capital Expenditure is $7,182 million, which is less than Comcast (CMCSA) at $14,695 million, but greater than Warner Bros. Discovery (WBD) at $1,004 million.
- Disney's Free Cash Flow is $10,896 million, which is less than Comcast (CMCSA) at $13,425 million, but greater than Warner Bros. Discovery (WBD) at $4,339 million.
- Disney's cash flow generation is strong, but it is less than Comcast's. This could be due to differences in business models or investment strategies.
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Growth and Future Prospect:
- Disney demonstrates superior growth in profitability metrics (Net Income, Basic Earnings per Share, and EBIT Margin), indicating improved efficiency and cost management.
- Disney's Sales/Revenue growth lags behind its peers, suggesting potential challenges in expanding its top line.
- Disney's Free Cash Flow and Free Cash Flow Margin growth are also lower than its peers, which could impact its ability to invest in future growth opportunities.
- Disney's growth rates have been highly volatile over the past 5 years, particularly for Net Income, Basic Earnings per Share, and EBIT Margin.
- Disney's most recent year-over-year growth rates for Net Income, Basic Earnings per Share, and EBIT Margin are significantly higher than its 5-year CAGRs, indicating an acceleration of growth in these areas. However, its most recent year-over-year growth rates for Free Cash Flow and Free Cash Flow Margin are lower than its 5-year CAGRs, suggesting a deceleration of growth in these areas.
- Disney's growth is concentrated in profitability metrics, while its revenue growth is lagging behind. This could be a concern if Disney is unable to sustain its cost-cutting measures or improve its revenue generation capabilities.
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Potential for Investment:
- Disney presents a mixed investment case. Its strong brand, market capitalization, and profitability make it an attractive investment. However, its lower revenue growth, liquidity concerns, and efficiency compared to Comcast raise some concerns.
- Investors should carefully consider Disney's valuation in light of its growth prospects and financial health. While Disney's stock may command a premium due to its brand, it is essential to assess whether this premium is justified by its future performance.
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Key Risks and Considerations:
- Disney's lower revenue growth compared to peers could limit its ability to generate future earnings and cash flow.
- Disney's liquidity ratios are below the industry average, which could pose short-term financial challenges.
- Disney's reliance on cost-cutting measures to drive profitability may not be sustainable in the long run.
- The high volatility of Disney's growth rates suggests that its future performance may be difficult to predict.
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Overall Assessment:
- Disney's overall financial position is strong, but it faces some challenges. Its leading market capitalization, strong brand, and profitability provide a solid foundation for future growth. However, its lower revenue growth, liquidity concerns, and efficiency compared to Comcast need to be addressed.
- Disney's future prospects depend on its ability to improve its revenue generation capabilities, manage its costs effectively, and maintain its brand strength.