How much is The Walt Disney Company (NYSE: DIS) really worth? Using the latest financial data, we embarked on a journey to uncover Disney’s intrinsic value by analyzing its future cash flows and discounting them to today’s value. Our go-to method? The Discounted Cash Flow (DCF) model, a favored tool for many finance enthusiasts!
First, a peek at our findings: According to our two-stage DCF model, Disney’s projected fair value stands at $108 per share, with the current trading price hovering around $89.57. This situates the stock near its fair value, but a nifty 14% below the $123 target set by expert analysts. Intrigued? Let’s dive deeper into the numbers!
The two-stage DCF model first looks at a high-growth phase over a decade. Based on predictions and historical data, this spans from 2025 to 2034. During this period, Disney’s levered Free Cash Flow (FCF) is expected to grow steadily, starting at $8.78 billion in 2025 and climbing to $12.7 billion by 2034. These figures are then discounted to today’s value with a 7.6% discount rate, accumulating $73 billion over ten years.
What’s next? The Terminal Value, representing Disney’s cash flow after the initial growth phase, calculated using the Gordon Growth model and discounted back to present value. For Disney, this equates to a significant $124 billion. Combining both stages, the total equity value sums up to $197 billion, pinpointing Disney’s fair value at a 17% discount to its current stock price. However, remember, complex models rely on assumptions—so tweaking these inputs can yield vastly different results.
Curious about Disney’s strengths and weaknesses? Our SWOT analysis highlights low debt and covered dividends as strong points, but flags a dip in earnings and comparably low dividends. Opportunities include rapid earnings growth exceeding the market rate and substantial insider buying. On the downside, Disney’s annual revenue growth trails behind the broader market.
While the DCF model provides valuable insights, it’s essential not to rely solely on it when deciding on investments. Adjusting assumptions, examining potential risks, and comparing growth rates with market peers can drastically alter Disney’s valuation. Interested in playing around with these numbers? Check out our analysis tools and read more about other promising companies.
We invite you to share your thoughts! Do you agree with our valuation of Disney? Drop your comments below and let’s get the conversation rolling!
