Key takeaways
View moreDisney's current valuation appears to undervalue its strong market position and growth potential, with EV/EBITDA at 11.94x versus industry average of 17.67x, while demonstrating superior profitability metrics compared to peers. The company's significant investments in theme parks and streaming optimization, combined with its strong brand and diverse revenue streams, suggest potential for multiple expansion, despite near-term liquidity concerns and competitive pressures.
- Disney's net profit margin of 13.93% significantly exceeds the industry average of -85.70%, showcasing strong profitability.
- The current ratio of 0.64 and quick ratio of 0.58 are below the industry average, indicating potential liquidity challenges.
- The total debt to total equity ratio of 41.11% is substantially lower than the industry average of 1568.85%, reflecting good long-term solvency.
- The Experiences segment is a key growth driver, with management highlighting strong performance and returns on invested capital at all-time highs in the recent earnings call.
- Disney is investing over $30 billion in theme parks in Florida and California, signaling a commitment to long-term growth in the Experiences segment.
- The company is focused on improving its streaming business through bundling, technology enhancements, and content investments, with a strategic shift towards higher-quality content for Marvel.
- Recent developments include the announcement of Disneyland Abu Dhabi and the deployment of a cruise ship in Singapore, demonstrating a focus on international expansion.
- The company faces risks including intense competition in the media/entertainment industry, macroeconomic conditions, and ongoing legal matters, such as a securities class action lawsuit.
- Management raised its full-year EPS guidance to $5.75, indicating confidence in continued performance and long-term growth.
- DIS has generally underperformed The Communication Services Select Sector SPDR Fund (XLC) over the analyzed periods, indicating a higher risk profile.
Evaluation summary
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Company Overview:
- The Walt Disney Co. (DIS) is a global entertainment and media enterprise operating in three segments: Entertainment, Sports (primarily through ESPN), and Experiences (theme parks, resorts, cruise line, and consumer products).
- Key products and services include film and TV content, direct-to-consumer (DTC) streaming services (Disney+, Hulu, ESPN+), theme park admissions, resort stays, consumer products, and live sports programming. The Entertainment segment encompasses 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.
- Benchmarks used for comparative analysis include The Communication Services Select Sector SPDR Fund (XLC). Peers include Comcast Corp. (CMCSA) and Warner Bros. Discovery, Inc. (WBD).
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Financial Performance:
- The company's revenue has shown a general increasing trend. For the quarter ending March 31, 2025, revenue was $23.504 billion, compared to $24.602 billion for the quarter ending December 31, 2024, $22.449 billion for the quarter ending September 30, 2024, and $23.046 billion for the quarter ending June 30, 2024.
- Net income has fluctuated, with a high of $3.401 billion for the quarter ending March 31, 2025, and a low of $564 million for the quarter ending September 30, 2024.
- The gross profit margin for the quarter ending March 31, 2025, was 31.36%, compared to an industry average of 9.67%. The net profit margin for the same quarter was 13.93%, significantly higher than the industry average of -85.70%.
- Return on Average Assets for the quarter ending March 31, 2025, was 4.56%, Return on Average Total Equity was 8.75%, and Return on Average Total Capital was 8.80%. These are all greater than the industry averages of -8.10%, -46.34%, and -6.27%, respectively.
- The recent earnings call highlighted strong Q2 2025 results, with adjusted EPS up 20% year-over-year, and the company raised its full-year EPS guidance from $5.30 to $5.75.
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Operational Efficiency:
- Total current assets decreased from $23.501 billion as of June 30, 2024, to $21.672 billion as of March 31, 2025. Total current liabilities decreased from $35.612 billion to $34.029 billion over the same period.
- Working capital is negative, with a value of -$12.357 billion as of March 31, 2025.
- Net operating cash flow increased from $2.602 billion for the quarter ending June 30, 2024, to $6.753 billion for the quarter ending March 31, 2025.
- Free cash flow to equity increased from $1.237 billion for the quarter ending June 30, 2024, to $4.891 billion for the quarter ending March 31, 2025. The free cash flow margin for the same quarter was 21%.
- Total capital expenditure was $1.862 billion for the quarter ending March 31, 2025, while depreciation, depletion, and amortization were $1.324 billion.
- Cash dividends paid were $905 million for the quarter ending March 31, 2025.
- The current ratio is 0.64 as of March 31, 2025, below the industry average of 1.04, indicating potential liquidity issues. The quick ratio is 0.58, also below the industry average of 1.03.
- The total debt to total equity ratio is 41.11% as of March 31, 2025, significantly lower than the industry average of 1568.85%. The debt/EBITDA ratio is 2.33, also lower than the industry average of 5.37.
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Growth Opportunities:
- The company is expanding its Experiences segment with the announcement of Disneyland Abu Dhabi, blending Disney stories with Emirati culture.
- Disney is investing over $30 billion in theme parks in Florida and California to enhance offerings and create jobs.
- A key strategic 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.
- The earnings call highlighted the company's focus 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.
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Recent Developments and Market Sentiment:
- 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.
- Disney is shifting its focus towards higher-quality content, particularly for Marvel, suggesting a strategic adjustment to improve performance and brand perception.
- The advertising market is healthy, especially for live sports, providing a positive outlook for Disney's advertising revenue.
- The company 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.
- Disney announced plans to combine certain Hulu Live TV assets with fuboTV Inc., a virtual MVPD, in which Disney will have a 70% controlling interest.
- Disney reached a $220 million settlement with fuboTV related to antitrust claims.
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Risks and Threats:
- 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.
- 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.
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Valuation Analysis:
- The Enterprise Value to EBITDA ratio is 11.94 for the quarter ending March 31, 2025, compared to an industry average of 17.67. The Enterprise Value to Sales ratio is 2.34, compared to an industry average of 2.96.
- Potential catalysts include the successful launch of ESPN's DTC product, continued growth in the Experiences segment, and improvements in the streaming business.
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Price Performance:
- The stock price has shown an upward trend from approximately $86.09 on April 22, 2025, to $118.13 on June 17, 2025.
- The Walt Disney Co. (DIS) has generally underperformed The Communication Services Select Sector SPDR Fund (XLC) over the analyzed periods. While DIS showed overperformance in the 1-month, 3-month, and 6-month periods, it underperformed in the year-to-date, 1-year, 2-year, and 3-year periods.
- DIS offers moderate returns with moderate volatility. Its 3-year annualized return is 8.55%, while its annualized volatility has fluctuated, recently around 27.82% as of March 14, 2025.
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Future Outlook:
- Management 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.
- The company anticipates continued growth in the Experiences segment and improvements in the streaming business.
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Summary:
- The Walt Disney Co. (DIS) demonstrates strong profitability and good long-term solvency but faces liquidity concerns. The Experiences segment is a key growth driver, and the company is actively working to improve its streaming business.
- Strengths: Strong brand recognition, diverse revenue streams, and a robust Experiences segment.
- Weaknesses: Low current and quick ratios, indicating potential liquidity issues.
- Opportunities: Expansion of the Experiences segment, growth in the streaming business, and international expansion.
- Threats: Intense competition, macroeconomic conditions, and regulatory risks.
- Overall, DIS is financially stable, but its liquidity needs to be monitored. Critical factors for future performance include the success of its streaming initiatives, the continued growth of its Experiences segment, and its ability to manage risks and threats.
- DIS presents a mixed investment profile. Its strong brand and diverse revenue streams offer stability, but its liquidity concerns and competitive pressures need to be carefully considered. The company's strategic initiatives and investments in core businesses are expected to drive long-term growth, but its valuation is relatively high compared to industry averages.
Price history
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Fundamentals
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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
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Public filings
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- 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
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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
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Benchmarks (as of 2025-06-18)
The Communication Services Select Sector SPDR Fund (XLC)
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Performance Comparison:
- The Walt Disney Co. (DIS) has generally underperformed The Communication Services Select Sector SPDR Fund (XLC) over the analyzed periods. While DIS showed overperformance in the 1-month, 3-month, and 6-month periods, it underperformed in the year-to-date, 1-year, 2-year, and 3-year periods. For instance, over the last three years, DIS returned 27.9% compared to XLC's 96.68%, a significant underperformance of 68.78%.
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Risk and Return Analysis:
- The annualized returns for DIS are consistently lower than those of XLC. Over the past three years, DIS had an annualized return of 8.55%, while XLC had an annualized return of 25.29%. This indicates that XLC has provided higher returns compared to DIS.
- The annualized volatility of DIS has fluctuated throughout the period, with notable spikes in Q4 2022 and Q2 2025. In contrast, XLC's volatility has been relatively stable. For example, in Q2 2025, DIS's volatility reached 65.12%, while XLC's volatility was 41.47%. This suggests that DIS is generally more volatile than XLC.
- The maximum drawdown for DIS was -57.33%, occurring on 10/04/2023 and 10/27/2023, while the maximum drawdown for XLC was -46.65%, occurring on 11/03/2022. This indicates that DIS experienced a more significant decline from its peak compared to XLC, suggesting a higher risk profile.
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Risk-Adjusted Performance:
- The Sharpe ratios for DIS are generally lower than those of XLC, indicating that XLC offers better risk-adjusted returns. For example, in Q4 2023, DIS's Sharpe ratio ranged from -0.71 to 0.49, while XLC's Sharpe ratio ranged from 1.12 to 2.43.
- The beta of DIS has decreased from above 1 to below 1 over the analyzed period, suggesting that its sensitivity to market movements has decreased. In contrast, XLC's beta has remained relatively stable, mostly above 1. This indicates that DIS has become less volatile compared to the overall market.
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Overall Assessment:
- Based on the analysis, The Communication Services Select Sector SPDR Fund (XLC) has generally outperformed The Walt Disney Co. (DIS) in terms of historical performance, annualized returns, and risk-adjusted returns. DIS exhibits higher volatility and a larger maximum drawdown compared to XLC, indicating a higher risk profile. The decreasing beta of DIS suggests that its sensitivity to market movements has decreased over time.
- A significant trend is the decreasing beta of DIS, indicating that it has become less sensitive to market movements. Additionally, the higher volatility and larger maximum drawdown of DIS compared to XLC suggest that it may be a riskier investment option.
Peers Price History(as of 2025-06-18)
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Performance Comparison:
- The Walt Disney Co. (DIS) has shown mixed performance compared to its peers. Over the past three years, DIS has outperformed Comcast Corp. (CMCSA) but has underperformed Warner Bros. Discovery, Inc. (WBD) over the past year. For instance, DIS has a 3-year return of 27.9% compared to CMCSA's -2.43%, but a 1-year return of 16.29% compared to WBD's 47.21%. Recent performance shows DIS outperforming both CMCSA and WBD year-to-date, with returns of 6.35%, -6.84%, and -0.84% respectively.
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Risk and Return Analysis:
- DIS offers moderate annualized returns with moderate volatility. Its 3-year annualized return is 8.55%, while its annualized volatility has fluctuated, recently around 27.82% as of March 14, 2025. In comparison, CMCSA has lower volatility but also lower returns, while WBD has higher volatility and, at times, higher returns. The maximum drawdown for DIS was -57.33% on 10/04/2023, which is less severe than WBD's -78.49% on 08/12/2024 but more severe than CMCSA's -52.11% on 10/11/2022.
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Risk-Adjusted Performance:
- DIS's Sharpe Ratio has generally been lower than that of CMCSA, indicating a less favorable risk-adjusted return. As of Q2 2025, DIS has a Sharpe Ratio of 0.41, while CMCSA has a Sharpe Ratio of -0.16. This suggests that CMCSA has not been providing adequate compensation for the risk taken. DIS's beta has fluctuated around 1, indicating that it generally moves with the market. As of Q2 2025, DIS has a beta of 0.97, CMCSA has a beta of 0.63, and WBD has a beta of 1.57.
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Overall Assessment:
- The Walt Disney Co. (DIS) presents a mixed profile when compared to Comcast Corp. (CMCSA) and Warner Bros. Discovery, Inc. (WBD). DIS offers moderate returns with moderate volatility, making it a balanced choice. CMCSA is less volatile but provides lower returns, while WBD is more volatile with the potential for higher returns but also greater risk. Recent trends indicate that DIS is outperforming CMCSA year-to-date, but WBD has shown stronger performance over the past year. The Sharpe Ratio suggests that CMCSA has historically offered better risk-adjusted returns, but recent data indicates that DIS and WBD are currently offering similar risk-adjusted returns.
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.
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