jeudi 10 février 2022

Why Disney (DIS) is not as expensive as it seems

Who the fuck is crazy enough to buy shares of Disney? 

Current PE is about 130 and forward PE is higher than 30. That's completely crazy. It's not an high-tech stock selling stuff like there's no tomorrow. 


A lot of people (including me not so long ago) thought that Disney was super expensive. However, it appears that it's a case where current PE doesn't say everything. 

The answer is simple: Disney has been badly hurt by COVID. The stock is currently so "expensive" because earnings decreased a lot during COVID.  

Here's DIS EPS from 2015 to 2021. As we can see, if Disney's earnings go back to 2018 level, the stock would today be sold for less than 18 times earnings. 


That's a company that should grow by more than 30% on an annual basis given estimates. Let's be conservative and let's say that earnings will "just" grow by 15%. Even with that growth rate, a PE of 18 is low for such an high quality stock. 

As we can see by yesterday's results, the company is doing great with parks and Disney +.  Expectations were beaten by a wide margin. 

It's now possible to pay a very reasonable price for Disney if we look 2-3 years in the future. That's probably why some investors are super bullish on that stock (Pat Dorsey put 11% of his portfolio on Disney. He's usually super bullish on very high growth stocks). 

1 commentaire:

  1. I don't know. I was very bullish on $DIS before the FOX acquisition. Made lot of money with this company. $DIS took a lot of debt to buy FOX and I don't like the balance sheet anymore. It's probably just me, I really struggle to evaluation companies with a lot of debt, I just prefer net cash.

    You should take a look at Nintendo ($NTDOY), it's kind of the Disney of Japan. They, obviously, have games (the greatest franchises in my opinion), theme parks are coming, movies are coming... if you don't know, f*cking Pokémon is the biggest franchise in entertainement (bigger than Star Wars, or Marvel, etc.). The stock is 14 times earnings without any debt. The problem is.. we don't know what will be the successor of the Switch, Nintendo latest console, will it be a flop like the WiiU (13 millions consoles sold) or another homerun like the Switch (+100 millions consoles sold and still growing).