Investors often have a subconscious belief that large, well-established corporations — particularly those recognized as household names — are immune to difficulties. The mere thought of iconic brands like Coca-Cola (NYSE: KO) or Walmart (NYSE: WMT) facing challenges can seem surreal.
However, challenges do arise, as demonstrated by Disney (NYSE: DIS), a major player in entertainment and a cherished provider of childhood nostalgia. Despite its renowned status, Disney has faced significant hurdles since its peak stock price of nearly $200 in early 2021, with shares dropping to a decade-low in September 2023.
The pandemic forced the closure of theme parks and cruise lines, and although Disney+ initially experienced remarkable growth, that momentum rapidly diminished. Additionally, leadership has been a concern, notably with the return of former CEO Bob Iger in 2022. Iger is set to resign again in 2026.
As for 2024, it has been a mix of highs and lows for Disney, with its stock reaching a peak of $122 in April, followed by a decline that lasted until early September.
Recent developments, however, indicate a possible turnaround for the media giant. On November 14, shares opened at $111.35, reflecting an 8.2% rise from the previous closing price of $102.91.
DIS stock surges on earnings beat
This recent surge, which has brought year-to-date (YTD) returns to 22.76%, followed the release of Disney’s unexpectedly robust Q4 and full-year 2024 earnings report on November 14.
Earnings per share (EPS) reached $1.14, exceeding expectations of $1.11. This marks a year-over-year (YoY) growth of 39%. Notably, the entertainment segment saw the most significant improvement, posting an operating income of $1.1 billion, a substantial increase from last year’s $0.3 billion for the same quarter — this division had incurred losses totaling roughly $8.2 billion from 2021 to 2023.
Disney also released two of the highest-grossing films of 2024 up to this point — Inside Out 2 and Deadpool & Wolverine, achieving box offices of $1.69 billion and $1.33 billion, respectively.
On the streaming front, Disney+, Hulu, and ESPN collectively recorded a profit of $253 million for the quarter, a sharp recovery compared to a $420 million loss during the same period in 2023.
Disney is confident in its future — and so are investors
While Disney typically refrains from providing forward-looking guidance, this earnings call marked an exception. The company anticipates high-single-digit EPS growth relative to 2024 in the upcoming year, along with double-digit growth projected for 2026 and 2027.
Currently, DIS stock appears to be an appealing option for buy-and-hold investors — the price needs to rise by approximately 80% to reach its previous all-time high, and the forward price-to-earnings ratio (P/E) of DIS shares is at 19.94, suggesting a potential undervaluation.
Equity analysts on Wall Street seem to have made a wise call by raising their price targets in late October. Although the subject of Iger’s impending departure remains a source of uncertainty due to the lack of an announced successor, if Disney stock continues on its current trajectory, there is little doubt about its considerable upside potential.
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