The Walt Disney Co (DIS, Financial) has recently experienced a daily loss of -2.29% and a three-month decline of -3.8%. Despite these figures, the company boasts an Earnings Per Share (EPS) of $1.28. This begs the question: is The Walt Disney Co (DIS) significantly undervalued? As we delve into the valuation analysis, we invite you to consider the compelling evidence that may influence your investment decisions.
Company Introduction
The Walt Disney Co, an entertainment powerhouse, owns an array of globally recognized characters and operates various theme parks, film studios, and media networks. The company has made a strategic shift towards a streaming-focused business model, amassing over 235 million subscribers across its platforms. With a current stock price of $88.27 and a GF Value of $135.2, The Walt Disney Co (DIS, Financial) presents an intriguing case for value investors. The following analysis will explore whether the market has undervalued the company's stock, combining a financial perspective with key company insights.
Summarize GF Value
The GF Value is an exclusive metric that assesses the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The Walt Disney Co (DIS, Financial) stock appears to be significantly undervalued according to our GF Value calculation. With a market cap of $157.20 billion and a stock price well below the GF Value Line, there is a strong indication that the long-term return of its stock could surpass its business growth.
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Financial Strength
Assessing the financial strength of a company is a crucial step before investing. The Walt Disney Co's cash-to-debt ratio stands at 0.31, placing it in a less favorable position than many of its industry peers. Despite this, the company's overall financial strength is deemed fair, with a score of 6 out of 10. This assessment suggests that while there are risks, The Walt Disney Co maintains a stable financial foundation.
Profitability and Growth
Consistent profitability is a key indicator of a company's long-term viability. The Walt Disney Co has achieved profitability for 9 out of the past 10 years, with an operating margin that outperforms 72.27% of its competitors in the Media - Diversified industry. This level of profitability, combined with a robust growth profile, positions The Walt Disney Co favorably for future investment. The company's 3-year average annual revenue growth of 10.3% and EBITDA growth rate of 30.1% underscore its potential for creating shareholder value.
ROIC vs WACC
The comparison between a company's Return on Invested Capital (ROIC) and its Weighted Average Cost of Capital (WACC) is a measure of profitability and value creation. The Walt Disney Co's ROIC over the past 12 months stands at 3.48, which is below its WACC of 10.7, indicating that the company is not currently generating a surplus over its cost of capital. This aspect of the company's financial performance requires careful consideration by potential investors.
Conclusion
Overall, The Walt Disney Co (DIS, Financial) stock exhibits signs of being significantly undervalued. The company's financial condition and profitability are deemed fair, with growth rates that are competitive within the industry. For a more detailed examination of The Walt Disney Co's financials, potential investors can explore the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
