The House of Mouse has buckled below the triple-digit mark. Shares of Walt Disney (DIS 1.83%) tumbled 5% to $97.90 on Tuesday, its first close below $100 in more than four months. The headwinds are swirling beyond the general market pullback. A trip to one of Disney's theme park attractions isn't cheap, and concerns of a potentially softening economy would slow the turnstile clicks. The trade war is heating up, and that could also send shockwaves through most of the diversified media conglomerate's subsidiaries.
It's not just a global recession that can be triggered by the risk of stagflation both here and abroad. The battle itself can deteriorate the appeal of American brands in international markets, and this can hit Disney harder than you may think. Mickey Mouse collects passport stamps everywhere you look. Half of Disney's dozen theme parks are located overseas. A surprising 54% of Disney+ subscribers are streaming outside the U.S. and Canada. Disney had the world's three highest-grossing theatrical releases last year, and foreign ticket sales accounted for 62%, 52%, and 57% of the total box office receipts.
Disney becomes a risky investment when it's a smaller world after all. With that bleak backdrop out of the way, let's dive into why the media stock bellwether could be a great candidate to bounce back into the triple digits -- sooner than you probably think.
NYSE: DIS
Key Data Points
Barbarians at the gate
Disney stock hasn't just given back the past four months of gains. The shares are trading 13% lower than where they were a year ago.
Still, a lot of positive things have happened over the past 365 days. Disney was in a proxy battle against two activist groups a year ago, and it emerged victorious a few weeks later. The entertainment behemoth is also four-for-four on quarterly earnings beats. It was able to turn its streaming business profitable earlier than expected, and after a weak 2023 at the local multiplex, Disney's studio convincingly regained the pole position. Then there was a succession timeline to name CEO Bob Iger's replacement, easing a popular pressure point. Finally, while revenue for fiscal 2024 rose a modest 3%, adjusted earnings per share soared 32%.
Shifting your eyes from the rearview mirror to the dashboard, you see that Disney's doing fine despite the stock's recent downticks. It's one of the few companies for which analyst profit targets, for this fiscal year as well as next year, have been inching higher over the past three weeks. Wall Street pros see Disney earning $5.49 a share this fiscal year, ending in September, and $6.15 a share in fiscal 2026. Moreover, Disney is trading for less than 16 times next year's earnings, a historical discount in an otherwise inflated market.
Image source: Disney.
Minnie silver linings
Analyst targets are mirroring Disney's recent long-term guidance. The company expects adjusted earnings per share to climb in the high single digits this year before returning to double-digit bottom-line growth in fiscal 2026 and fiscal 2027.
With all that in mind, there may be some near-term question marks to deal with. Disney has braced investors to expect ho-hum results for its theme parks until at least later this year, and its strong recovery at the box office last calendar year is off to a slow start in 2025. Last month's release of Captain America: Brave New World is the global leader in ticket sales so far this young year, but its performance is still well shy of recent Marvel blockbusters. The prognosis is even more unkind for next weekend's premiere of the live-action Snow White reboot.
The good news is that there's no shortage of positive buzz for many of the other films on the release slate later this calendar year.
Disney is cheaper than it's been in a long time. If the world and stateside brands can sidestep a global funk, it's hard to imagine that Disney stock will stay stuck in the double digits for too long. It's a small, small world, but the sky has a high, high ceiling.
