Is Market Overlooking DIS Right Now?
Here is why we think Walt Disney (DIS) deserves consideration as a value stock. It is currently trading nearly 9.1% below its 1 year high, and also trading at a PS multiple which is below the average for the last 3 years. However, it has reasonable fundamentals for its level of valuation.
- Reasonable Revenue Growth: 5.0% LTM and 5.3% last 3 year average.
- Cash Generative: Nearly 12.2% free cash flow margin and 14.8% operating margin LTM.
- No Major Margin Shocks: DIS has avoided any margin collapse in the last 12 months.
- Modest Valuation: Despite encouraging fundamentals, DIS trades at a PE multiple of 17.6
- Opportunity vs S&P: Compared to S&P, you get lower valuation, lower revenue growth, but lower margins
As a quick background, Walt Disney operates worldwide as an entertainment company providing media distribution, theme parks, resorts, and related experiences through its global segments and subsidiaries.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
| DIS | S&P Median | |
|---|---|---|
| Sector | Communication Services | – |
| Industry | Movies & Entertainment | – |
| PE Ratio | 17.6 | 23.9 |
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| LTM* Revenue Growth | 5.0% | 5.2% |
| 3Y Average Annual Revenue Growth | 5.3% | 5.3% |
| LTM Operating Margin Change | 2.3% | 0.3% |
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| LTM* Operating Margin | 14.8% | 18.6% |
| 3Y Average Operating Margin | 11.9% | 17.8% |
| LTM* Free Cash Flow Margin | 12.2% | 13.3% |
*LTM: Last Twelve Months
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But do these numbers tell the full story? Read Buy or Sell DIS Stock to see if Walt Disney still has an edge that holds up under the hood.
Stocks Like These Can Outperform. Here Is Data
Below are statistics for stocks with same selection strategy applied between 12/31/2016 and 6/30/2025.
- Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
- Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
- Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 20% with 67% win rate.
But Consider The Risk
That said, Disney isn’t immune to big drops. It fell over 60% during the Dot-Com Bubble and pulled back about 56% in the Global Financial Crisis. The inflation shock last year hit it nearly as hard, with a 61% dip. Even the Covid sell-off caused a 42% drop, while the 2018 correction saw a more modest 16% loss. Solid fundamentals matter, but when the market turns, Disney can still take a serious hit.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read DIS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.