WALT DISNEY CO/ (DIS): what the price requires
The current priced-in claim for WALT DISNEY CO/ (DIS) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/DIS
Headline
| Field | Value |
|---|---|
| Ticker | DIS |
| Company | WALT DISNEY CO/ |
| Current price | $96.04/sh |
| Composition | Subscription and affiliate fees 40% / Advertising 12% / Theme park admissions 12% / Retail and wholesale sales of merchandise, food and beverage 10% / Resort and vacations 10% / Merchandise licensing 4% / TV/VOD and home entertainment distribution 4% / Theatrical distribution licensing 3% / Other 5% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 5.0% |
| Operating margin today | 18.5% |
| Margin compression implied | -13.5pp |
| Multiple paid | 11x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7.2% cost of capital with 4% terminal growth over a 5-year stage.
Reconcile: at the x-ray's 9.3% required return this reads ~-1.4%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.76σ |
| cohort percentile (of 32 peers) | 19 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.25x | 5 | expensive |
| Earnings | 2.01x | 5 | expensive |
| Relative | 0.87x | 5 | justifies |
| Growth | 1.09x | 5 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.
Per-Model Detail (n=20)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $75.02 | 1.28x | yes | FCF base $7.1B, growth 3% (input: historical growth), terminal g 3.4%, WACC 7.4%, 5yr projection |
| DCF Exit Multiple | Growth | $88.31 | 1.09x | yes | Exit EV/EBITDA: 7.3x / 9.3x / 11.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $83.44 | 1.15x | yes | P/E 16.25x (blended: static sector reference 14x + trailing (TTM) 22x), scenarios: 13.6x / 16.3x / 18.9x (bear / base = reference held flat / bull), EV/EBITDA 9x |
| Simple DDM | Growth | $164.43 | 0.58x | yes | DPS $3.02, g=7.3% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $107.03 | 0.90x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $48.29 | 1.99x | yes | BV/sh $61.35, ROE (TTM) 7.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $42.61 | 2.25x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $69.49 | 1.38x | yes | Rev $97.3B, growth 3% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.7x / 2.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $154.42 | 0.62x | yes | EPS $4.41, growth 35% (input: historical EPS growth), PEG=0.61 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $68.84 | 1.40x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $16.53B × (1−27%) / WACC 7.4% → EPV (no growth) |
| Residual Income | Asset | $41.77 | 2.30x | yes | BV $61.35 + 5yr PV of (ROE (TTM) 7.3% − Kₑ 9.3%) × BV; BV grows 4.7%/yr |
| Graham Number | Asset | $78.04 | 1.23x | yes | √(22.5 × EPS $4.41 × BVPS $61.35) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $91.80 | 1.05x | yes | EBITDA $22.70B × sector EV/EBITDA 9.0x |
| FCF Yield | Earnings | $19.86 | 4.84x | yes | FCF $7110.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $10.99 | 8.74x | yes | SBC-adj FCF $5.66B (FCF $7.11B − SBC $1.45B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $142.36 | 0.67x | yes | EPS $4.41 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $18.59 | 5.17x | yes | BV $61.35 × (ROIC 2.2% / WACC 7.4%) |
| P/Sales Sector | Relative | $109.78 | 0.87x | yes | Revenue $97.26B × sector P/S 2.0x |
| PEG Fair Value | Relative | $165.45 | 0.58x | yes | EPS $4.41 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $47.70 | 2.01x | yes | EPS $4.41 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $41.8b |
| Net debt / NOPAT (after-tax) | 3.14x |
| Net debt / operating income (pre-tax) | 2.30x |
| Interest coverage | 10.0x |
| Share count CAGR (buyback) | -0.8% |
| Burning cash | no |
Bullet Takeaways
- Disney runs three engines, Entertainment (including Disney+ and Hulu), Sports (ESPN), and Experiences (the parks), and the swing factor is streaming, which just turned a real profit as the entertainment streaming margin reached 10.6% across 196 million subscribers.
- The biggest risk is the moat that is eroding underneath: traditional Linear Networks revenue fell 12% year over year as the cable bundle that long subsidized everything keeps shrinking, and streaming has to grow faster than that decline.
- Watch the capital-return ramp and the parks: management lifted its full-year buyback target to at least $8 billion from $7 billion and guides about 12% adjusted earnings growth, while the Experiences business posts records even as domestic park attendance dipped 1%.
Bull Case
Watch what Disney is now doing with its cash, because it signals that management believes the turnaround has reached the point of returning capital rather than just defending it. The company raised its full-year buyback target to at least $8 billion from a previously announced $7 billion and guided about 12% adjusted earnings growth this year with double-digit growth expected next year. A company stepping up buybacks while guiding accelerating earnings is telling you it sees its own stock as undervalued and its cash flow as durable, the opposite of a business in retreat.
The reason the cash flow is reaching that point is streaming finally working. After years of subscriber-growth-at-any-cost losses, Disney's entertainment streaming business hit a 10.6% operating margin in the most recent quarter, up from 8.4% the quarter before, with streaming income rising 88% year over year to $582 million across 196 million Disney+ and Hulu subscribers. The 10-K confirms the segment trend, attributing the improvement in Entertainment to "an improvement at Direct-to-Consumer" and to subscription revenue growth. Streaming flipping from a cash drain to a profit center changes the whole math of the company, because it removes the loss that was masking the earnings power of the rest of the business, and the newly launched ESPN direct-to-consumer app extends that streaming flywheel into sports.
The Experiences business is the ballast that makes the bet a value bet rather than a turnaround gamble. Disney's parks generated record March-quarter results, with revenue up 7% to $9.5 billion and operating income up 5% to $2.6 billion. The parks are an irreplaceable asset, decades of real estate, attractions, and an intellectual-property moat no competitor can build, and they throw off steady, high-margin cash flow that funds the streaming investment and the buyback. With the stock trading around twelve times operating income, a multiple so low it implies the business will shrink, the bull case is straightforward: a recovering, now-profitable streaming business, an irreplaceable parks franchise, and a management team buying back stock, priced as if the whole thing is in decline.
Bear Case
The advantage that is being chipped away is the one that built modern Disney: the cable bundle. For decades, affiliate fees from ESPN, ABC, and the cable channels were a near-automatic, high-margin annuity that subsidized everything else. That annuity is melting. Linear Networks revenue fell to $9,364 million from $10,692 million, a 12% year-over-year decline, as cord-cutting accelerates. The 10-K's own segment math shows the pressure, noting Entertainment operating income was hurt by "lower results at Content Sales/Licensing and Other and Linear Networks." The bull case requires streaming to grow faster than linear shrinks, and while streaming is now profitable, its 10.6% margin is a fraction of the margins the old cable bundle threw off. Disney is trading a high-margin legacy business for a lower-margin growth business, and the math of that swap is not obviously accretive.
ESPN is where the erosion gets most acute, and the near-term guidance shows it. The company expects ESPN operating income to decline 14% in the June quarter, driven by a double-digit increase in programming expenses including new sports-rights agreements. Sports rights are the most expensive content in the world and the costs keep escalating, while the audience that pays for them through the bundle keeps shrinking. The ESPN direct-to-consumer pivot is a bet that fans will pay directly for what they used to get inside the bundle, but it is unproven at scale and arrives just as rights costs spike. A company paying more every year for content while its distribution base erodes is fighting a structural headwind.
The parks, the supposed ballast, carry their own cyclical exposure that the price ignores at its peril. Disney is candid that the "profitability of our businesses and demand for and consumption of our products and services, particularly our parks and experiences businesses, are highly dependent on the general environment for travel and tourism." Domestic park attendance already dipped 1% in the latest quarter even as revenue grew on higher per-guest spending, a sign the company is pushing price to offset softening volume. In a consumer slowdown, discretionary travel is among the first things cut, and the parks' fixed-cost base means attendance declines hit profit hard. Add roughly $42 billion of net debt, and the picture is a company managing a difficult, multi-front transition: monetizing a shrinking bundle, scaling an unproven sports-streaming model, and leaning on cyclical parks. The price already reflects pessimism, so the bear is not pure overvaluation; the bear is that the transition is harder and slower than the buyback-and-streaming-profit narrative suggests, and that the eroding moat keeps the multiple low for longer than the bulls expect.
Valuation
Disney's price is undemanding to the point of pessimism. At roughly twelve times operating income, the multiple is so low that the price sits below what even a 5% annual decline in operating profit would warrant. In plain terms, the market is pricing Disney as a business in gentle retreat. The current operating margin near 18% is well above the roughly 5% the price implies it can sustain, so the price is assuming substantial margin erosion on top of the decline. Against a company guiding roughly 12% adjusted earnings growth, that is a notably cautious bar, which is why the framework reads the priced-in assumption as within range despite the low multiple.
The methods we use to triangulate point to a value name with a recovery underneath. The relative lens, valuing Disney against media and experiences peers, lands right around the price, and several of the growth and dividend-based methods land above it, treating the stock as cheap on its forward earnings. The asset and current earnings-power lenses read it as expensive, but that reflects the still-depressed free cash flow as streaming investment and the linear decline weigh on reported profitability rather than a structural overvaluation. The pattern is a business priced for stagnation while its largest swing factor, streaming, has just turned profitable, which is the gap the bull is buying and the bear says the eroding bundle justifies.
Solvency is manageable and supports the capital-return story. Net debt of about $42 billion is roughly two and a half times operating income, a comfortable load for a company generating Disney's cash flow, and the share count is shrinking modestly even before the stepped-up buyback. The downside is bounded by genuinely irreplaceable assets, the parks, the intellectual-property library, the brand, which retain enormous value regardless of the streaming math. What the valuation cannot resolve is the pace of the transition: whether streaming profit growth and the buyback outrun the linear decline and the rising sports-rights costs. The buyer at this price is paying a low multiple for a recovering franchise with a fortress of irreplaceable assets, betting that the moat erosion in traditional media is already more than priced in.
Catalysts
Disney's fiscal second-quarter 2026 result was a beat anchored by the streaming inflection. Revenue rose 7% to $25.17 billion, adjusted EPS of $1.57 beat consensus, and operating income exceeded the company's prior guidance. The headline was profitability in streaming: entertainment streaming operating margin reached 10.6%, up from 8.4% the prior quarter, with streaming income up 88% year over year to $582 million across 196 million Disney+ and Hulu subscribers. The recently launched ESPN direct-to-consumer app added a new leg to the streaming strategy.
The Experiences business set records even with a soft attendance note. March-quarter revenue rose 7% to $9.5 billion and operating income rose 5% to $2.6 billion, both fiscal-Q2 records, though global attendance grew only 2% and domestic park visitation slipped 1% year over year. The mix of record revenue on flat-to-down attendance shows Disney leaning on per-guest pricing, which works until consumers push back. On the cautionary side, the company guided ESPN operating income to fall 14% in the June quarter on higher programming and new sports-rights costs.
The capital-allocation and guidance signals were the most bullish part. Management raised its full-year buyback target to at least $8 billion from $7 billion, guided full-year fiscal 2026 adjusted earnings growth of about 12%, and projected double-digit adjusted earnings growth for fiscal 2027. Analyst sentiment moved with the print, with Barclays raising its price target to $135 and keeping an Overweight rating. The catalysts to watch are the continued expansion of streaming margins, the early traction of ESPN's direct-to-consumer app against its rising rights costs, the pace of the linear-network decline, and park attendance trends as a read on consumer health. Streaming margin progress is the single metric that most directly closes the gap between the low multiple and the recovering business.
Peer Cohorts (Per Segment, With Filing Citations)
Entertainment / Sports (reported)
- NFLX (Netflix, Inc.)
- (no filing in the citation store)
- WBD (Warner Bros. Discovery, Inc.)
- (no filing in the citation store)
- FOXA (FOX CORPORATION)
- (no filing in the citation store)
Experiences (reported)
- CMCSA (Comcast Corporation)
- (no filing in the citation store)
- WBD (Warner Bros. Discovery, Inc.)
- (no filing in the citation store)
- PSKY (Paramount Skydance Corporation)
- (no filing in the citation store)
- NFLX (Netflix, Inc.)
- (no filing in the citation store)
- FOXA (FOX CORPORATION)
- (no filing in the citation store)
- LYV (LIVE NATION ENTERTAINMENT, INC.)
- (no filing in the citation store)
- TME (Tencent Music Entertainment Group)
- (no filing in the citation store)
- SPOT (Spotify Technology S.A.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q2 fiscal 2026 results, May 2026 · Q2 fiscal 2026 guidance · Q2 fiscal 2026 results · Disney FY2025 10-K · Barclays note, May 2026