Disney (DIS) Stock Analysis: Buy, Sell, or Hold?
Learn to Invest - Investors Grow • 7 days ago
What This Video Is About
The video provides an overview of Disney's business and investment prospects, discussing the company's various segments, including entertainment, sports, and experiences.
Major Ideas Discussed
- Disney's business is divided into several segments, including entertainment, sports, and experiences, each contributing to the company's overall revenue and growth.
- The decline in operating profit margins started in 2019 due to a shift in their business model, including the launch of Disney Plus and the acquisition of Fox.
- Net income has been volatile, and shares outstanding have not always been decreasing, which is something to keep in mind when evaluating the stock's performance.
- Operating cash flow has ramped up, but capital expenditures have increased significantly, with a 10-year plan to invest $60 billion in their experiences business.
- Free cash flow has been driven by the experiences business, and analyst estimates expect some growth in free cash flow over the next few years.
- Using these estimates, Disney stock looks a bit overvalued, with a fair value of around $87 per share.
- The forward PE multiple is in the middle zone, indicating a neutral valuation, and historically, buying Disney when the forward PE is in the green has resulted in an average return of 18%, while buying when it's in the red has resulted in an average loss of 21%.
What to Watch Next
The speaker believes that Disney's investments in the experiences business will be the key driver of the company's long-term growth and that the stock has potential, but would like to see it pull back before adding more to their portfolio.