The Walt Disney Co (NYSE:DIS) Intrinsic Value: DCF (FCF Based)

: $7.28 (As of Today)

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As of today (2023-01-27), The Walt Disney Co's intrinsic value calculated from the Discounted Cash Flow model is $7.28.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

The Walt Disney Co's Predictability Rank is 1-Star. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for The Walt Disney Co is -1,406.87%.

The industry rank for The Walt Disney Co's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

The Walt Disney Co Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for The Walt Disney Co's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

The Walt Disney Co Annual Data

Trend

Sep13

Sep14

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Sep21

Sep22

Intrinsic Value: DCF (FCF Based)

153.49

20.67

The Walt Disney Co Quarterly Data
	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22
Intrinsic Value: DCF (FCF Based)																-	-	-	-	-

The Walt Disney Co Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Free Cash Flow Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $0.583.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

The Walt Disney Co's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)	=	Free Cash Flow per Share	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.1) = 0.95454545454545
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (FCF Based)

Free Cash Flow per Share

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

Free Cash Flow per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

0.583

12.485

7.28

Margin of Safety (FCF Based)	=	(Intrinsic Value: DCF (FCF Based)	-	Current Price)	/	Intrinsic Value: DCF (FCF Based)
	=	(7.28	-	109.70)	/	7.28
	=	-1,406.87 %

The Walt Disney Co (NYSE:DIS) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

The Walt Disney Co Intrinsic Value: DCF (FCF Based) Related Terms

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The Walt Disney Co (NYSE:DIS) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » The Walt Disney Co (NYSE:DIS) » Definitions » Intrinsic Value: DCF (FCF Based)

Comparable Companies

Traded in Other Exchanges

DIS-RM:Russia DIS:Mexico 0QZO:UK WDP0:Germany WDP:Germany WDP:Germany WDP:Germany WDP:Germany DIS:Chile DIS:Canada DISB34:Brazil DIS:Austria DIS:Argentina

Address

500 South Buena Vista Street, Burbank, CA, USA, 91521

Website

https://www.thewaltdisneycompany.com

Walt Disney owns the rights to some of the most globally recognized characters, from Mickey Mouse to Luke Skywalker. These characters and others are featured in several Disney theme parks around the world. Disney makes live-action and animated films under studios such as Pixar, Marvel, and Lucasfilm and also operates media networks including ESPN and several TV production studios. Disney recently reorganized into four segments with one new segment: direct-to-consumer and international. The new segment includes the two announced OTT offerings, ESPN+ and the Disney SVOD service. The plan also combines two segments, parks and resorts and consumer products, into one. The media networks group contains the U.S. cable channels and ABC. The studio segment holds the movie production assets.

Executives

Gutierrez Horacio E	officer: Sr EVP, General Counsel & Secy	500 SOUTH BUENA VISTA STREET BURBANK CA 91521
Morrell Geoff	officer: SEVP Chf Corp Affairs Officer	500 SOUTH BUENA VISTA STREET BURBANK CA 91521
Richardson Paul J	officer: Sr. EVP and Chief HR Officer	500 SOUTH BUENA VISTA STREET BURBANK CA 91521
Chang Amy	director	2100 SEAPORT BLVD. C/O INFORMATICA CORPORATION REDWOOD CITY CA 94063
Mcdonald Calvin	director	C/O LULULEMON ATHLETICA INC. 1818 CORNWALL AVENUE VANCOUVER A1 V6J 1C7
Chapek Robert A	officer: Chief Executive Officer	500 SOUTH BUENA VISTA STREET BURBANK CA 91521
Catz Safra	director	C/O DELPHI ASSET MGMT CORPORATION 5525 KIETZKE LANE, SUITE 200 RENO NV 89511
Arnold Susan E	director	THE PROCTER & GAMBLE COMPANY 1 PROCTER & GAMBLE PLAZA CINCINNATI OH 45202
Lagomasino Maria Elena	director	345 PARK AVENUE 5TH FL NEW YORK NY 10154
Parker Mark G	director	ONE BOWERMAN DR BEAVERTON OR 97005
Barra Mary T	director	300 RENAISSANCE CENTER M/C: 482-C25-A36 DETROIT MI 48265-3000
Froman Michael B. G.	director	2000 PURCHASE STREET PURCHASE NY 10577
Braverman Alan N	officer: Sr EVP, General Counsel & Secy	500 SOUTH BUENA VISTA ST BURBANK CA 91521-1030
Mccarthy Christine M	officer: SEVP-Chief Financial Officer	500 SOUTH BUENA VISTA STREET BURBANK CA 91521-0964
Parker Mary Jayne	officer: SEVP and Chief HR Officer	500 SOUTH BUENA VISTA STREET BURBANK CA 91521-0966