Investment Opportunities

Is Disney Stock Undervalued or Overvalued Today?

Disney (NYSE: DIS) is a $177 billion company today. Investors that bought shares one year ago are sitting on a 8.31% total return. That’s below the S&P 500’s return of 19.48%.

Disney stock is underperforming the market. It’s beaten down… so is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

Earnings-per-Share (EPS) Growth: Disney reported a recent EPS growth rate of -10.34%. That’s below the media industry average of 28.02%. That’s not a good sign. We like to see companies that have higher earnings growth.

Price-to-Earnings (P/E): The average price-to-earnings ratio of the media industry is 29.77. And Disney’s ratio comes in at 19.85. It’s trading at a better value than many of its competitors.

Debt-to-Equity: The debt-to-equity ratio for Disney stock is 43.43. That’s below the media industry average of 95.27. The company is less leveraged.

Free Cash Flow per Share Growth: Disney’s FCF has been lower than its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

Profit Margins: The profit margin of DIsney comes in at 16.77% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Disney’s profit margin is above the media average of 2.27%. So that’s a positive indicator for investors.

Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Disney is 20.63%, and that’s above its industry average ROE of 17.07%.

Disney stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a buy with caution.


Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.

Articles by
Related Articles