VALUATION HIGHLIGHTS

1. Experiences constitutes 47% of the Trefis price estimate for Disney's stock.
2. Entertainment constitutes 35% of the Trefis price estimate for Disney's stock.
3. Sports constitute 19% of the Trefis price estimate for Disney's stock.

WHAT HAS CHANGED?

Latest Earnings: Q2 Fiscal 2026

Disney reported second-quarter revenue of $25.2 billion, a 7% year-over-year increase, while adjusted EPS rose 8% to $1.57. Performance was bolstered by a 13% surge in Entertainment SVOD revenue and record-breaking second-quarter results in the Experiences segment, despite a 1% dip in domestic park attendance. Operating income for the streaming business (Disney+ and Hulu) climbed to $582 million, nearly double the prior-year period.

Note: Disney's FY'25 ended on September 27, 2025. Q2 FY'26 ended on March 28, 2026.

Leadership Transition and Three-Pillar Growth Plan

Following Josh D'Amaro's transition to CEO in mid-March 2026, the company unveiled a strategic pivot focusing on AI-powered storytelling, global consumer reach, and the "super app" integration of Disney+. This plan aims to consolidate entertainment, sports, and park experiences into a single digital interface to reduce churn and maximize lifetime value per subscriber.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Disney's value that present opportunities for upside or downside to the current Trefis price estimate:

Entertainment and Experiences

• Streaming Operating Margins: Disney is targeting a double-digit SVOD operating margin by the end of fiscal 2026, up from current levels. Successful implementation of AI-driven content discovery and higher ad-tier penetration could drive margins toward 12%, representing significant upside to the Entertainment segment valuation.


• Cruise Line Capacity Expansion: With the launch of the Disney Adventure in March 2026 and the Disney Destiny in late 2025, incremental cruise days are driving segment growth. However, high capital expenditures for these ships could pressure free cash flow in the short term if yields do not meet Trefis estimates of 9% growth.

For additional details, select a division from the interactive Trefis split for Disney at the top of the page.

BUSINESS SUMMARY

Disney is a global media and entertainment leader operating through Entertainment (streaming and linear), Sports (ESPN), and Experiences (parks, cruises, and consumer products). The company is currently focused on integrating its physical and digital ecosystems to drive higher long-term profitability.

SOURCES OF VALUE

The Experiences segment continues to be Disney's primary source of value due to its unparalleled ability to monetize proprietary intellectual property through physical destinations.

Global Park Pricing Power

Disney maintains significant pricing power at its domestic and international parks, where guest spending continues to rise despite minor fluctuations in attendance. This segment serves as a stable cash flow engine that funds the company's digital transformation.

Direct-to-Consumer Scale

With over 180 million combined subscriptions, Disney's streaming platform has reached the scale necessary to compete with pure-play digital leaders. The integration of Hulu content into Disney+ has created a more "sticky" product with lower churn rates than standalone offerings.

KEY TRENDS

AI Integration in Content and Operations

Under new leadership, Disney is aggressively deploying AI across five key areas: content production, monetization, workforce productivity, guest experiences, and enterprise operations. This shift is intended to offset rising production costs and improve operating leverage across the studio and park segments.

Aggressive Capital Return Strategy

Disney has raised its fiscal 2026 share repurchase target to at least $8 billion, up from the previous $7 billion goal. This reflects management's confidence in the company's free cash flow generation and a commitment to improving total shareholder returns amid the strategic transition.