WALT DISNEY COMPANY

Investment Screen & Intrinsic Value Report

Fundamental screens | Valuation | Intangible metrics

CURRENT PRICE

US$102.45

Market data used

CURRENT P/E

16.4x

Market EPS basis

DIVIDEND YIELD

~1.5%

Annualised dividend

VIEW

Fair value

Limited safety margin

Executive conclusion

Disney appears to be a quality recovery/value investment rather than a classic value trap. Revenue is consistent, debt is improving, shareholder returns have restarted, and the brand/IP base remains strong. However, FY2025 reported earnings were boosted by a large non-cash Hulu-related tax benefit, so normalised earnings are lower than headline EPS. At around US$102, the stock appears close to fair value rather than materially undervalued.

Report summary

Area

Result

Interpretation

Revenue consistency

Pass

Revenue increased from US$88.9b in FY2023 to US$94.4b in FY2025.

Earnings consistency

Mixed

Reported earnings improved, but FY2025 included a large one-off tax benefit.

Balance sheet

Pass

Debt-to-equity improved to roughly 38.3% in FY2025.

Profitability

Acceptable

ROE roughly 11.8%; ROIC roughly 7.2%; RONTA roughly 17.1%.

Shareholder returns

Improving

Dividend reinstated and FY2026 buyback target of at least US$8b.

Valuation

Fair value

Base case values cluster around US$100-US$102 per share.

Margin of safety

Limited

Better value would likely require a price closer to US$80-US$90.

Level 1 - Fundamental screens Revenue and earnings consistency

Fiscal year

Revenue

Net income attributable to Disney

Comment

FY2023

US$88.9b

US$2.35b

Revenue base recovered; earnings still rebuilding.

FY2024

US$91.4b

US$4.97b

Meaningful earnings improvement.

FY2025

US$94.4b

US$12.4b

Headline result boosted by Hulu-related non-cash tax benefit.

1H FY2026

US$51.1b

Not directly comparable here

Revenue up 6% year on year.

Assessment: Revenue consistency is a pass. Earnings consistency is mixed because the operating trajectory is improving, but reported FY2025 earnings need to be normalised before valuing the company.

Value trap vs value investment

Positive indicators

Caution points

Revenue continues to grow across the group.

GAAP earnings were temporarily flattered in FY2025.

Parks/Experiences remain highly profitable.

Linear TV remains under structural pressure.

Streaming profitability has improved.

Streaming remains highly competitive.

Debt is reducing and shareholder returns have resumed.

Parks are capital-intensive and sensitive to consumer spending.

Verdict: More value investment than value trap, but not a deep-value bargain at the current price.

Market valuation and shareholder returns

Metric

Latest estimate

Interpretation

Current share price used

US$102.45

Reference market price for this report.

Current P/E

16.4x

Moderate multiple if earnings recovery continues.

Annualised dividend

US$1.50/share

Based on two US$0.75 dividend declarations.

Dividend yield

~1.5%

Modest income yield.

Dividend payout ratio

~22%-24%

Conservative payout based on reported EPS.

FY2025 buybacks

US$3.5b

Buybacks restarted at scale.

FY2026 targeted buybacks

At least US$8.0b

Estimated buyback yield of roughly 4.4% on market cap.

Estimated total shareholder return yield

~5.8%

Dividend yield plus implied FY2026 buyback yield.

Profitability ratios

Ratio

Latest estimate

Read-through

ROE

~11.8%

Acceptable, but reported FY2025 net income is not fully normalised.

ROIC

~7.2%

Moderate for a high-quality brand/IP business.

RONTA

~17.1%

Stronger when goodwill and intangibles are excluded from the asset base.

Debt-to-equity and debt evolution

Metric

FY2024

FY2025

Change

Total borrowings

US$45.8b

US$42.0b

Improved by roughly 8.3%.

Disney shareholders' equity

US$100.7b

US$109.9b

Equity base increased.

Debt-to-equity

~45.5%

~38.3%

Balance sheet leverage improved.

Assessment: Debt is manageable and trending in the right direction. This supports the case that Disney is not a distressed value trap.

Level 2 - Intrinsic value calculation Book value and adjusted book value

Metric

Estimate

Comment

Price-to-book

~1.65x

Looks reasonable on reported equity.

Adjusted/tangible price-to-book

~6.65x

High after excluding goodwill and intangible assets.

Disney shareholders' equity

US$109.9b

Reported FY2025 equity base.

Goodwill + intangible assets

~US$82.6b

Goodwill US$73.3b plus intangible assets US$9.3b.

Estimated tangible equity

~US$27.3b

Book value is heavily driven by intangible assets.

Interpretation: Traditional P/B is not the best valuation tool for Disney because much of the true economic value sits in brands, characters, franchises, content libraries, and parks economics.

Dividend discounted valuation approximation

Input

Assumption

Current annual dividend

US$1.50/share

Long-term dividend growth

4%

Required return

9%

DDM value estimate

~US$31/share

Interpretation: The DDM value is far below the current share price, but this method is not highly relevant for Disney because Disney is not primarily a dividend stock. The majority of value should come from reinvestment, cash-flow growth, IP monetisation, streaming improvement, and buybacks.

Discounted earnings valuation

Assumption

Base case

Normalised EPS

US$6.25

EPS growth

8% per year for 5 years

Terminal P/E

16x

Discount rate

9%

Estimated value

~US$102/share

Terminal P/E sensitivity

Estimated value

14x

~US$90/share

16x

~US$102/share

18x

~US$114/share

Discounted cash flow valuation

Input / scenario

Estimate

FY2025 operating cash flow

US$18.1b

FY2025 capital investment

US$8.0b

Estimated FY2025 free cash flow

~US$10.1b

Base scenario: 6% FCF growth, 3% terminal growth, 8.5% discount rate

~US$100/share

Conservative scenario: 4% growth, 9.5% discount rate

~US$73/share

Optimistic scenario: 8% growth, 8.5% discount rate

~US$111/share

Safety margin to current purchase price

Valuation method

Estimated value

Margin vs US$102.45

Dividend discount model

~US$31/share

Negative; not useful as primary method.

Discounted earnings base case

~US$102/share

Approximately 0%.

DCF base case

~US$100/share

Approximately -2%.

DCF optimistic case

~US$111/share

Approximately +8%.

DCF conservative case

~US$73/share

Approximately -29%.

Valuation conclusion: Disney appears close to fair value at US$102.45. A more attractive entry point for a conservative value investor would likely be closer to US$80-US$90, where the margin of safety becomes more meaningful.

Level 3 - Intangible metrics Credit rating

Agency

Rating / status

Interpretation

Moody's

A2 / P-1, Stable

Strong investment-grade credit profile.

S&P Global

A / A-1, Stable

Strong investment-grade credit profile.

Fitch

A- / F2, Stable; later withdrawn for commercial reasons

Still indicates investment-grade credit quality before withdrawal.

Customer loyalty / NPS

Metric

Latest public estimate

Interpretation

The Walt Disney Company NPS

38

Positive, but not world-class across the entire corporate brand.

Promoters / passives / detractors

60% / 18% / 22%

Customer loyalty is positive overall.

Disneyland Resort NPS

49

Stronger parks/experiences loyalty signal.

Employee sentiment

Metric

Latest public figure

Interpretation

Overall employee rating

3.8 / 5

Generally positive, but not exceptional.

Recommend to a friend

71%

Reasonably healthy employee advocacy.

Positive business outlook

57%

Moderate confidence in business direction.

Qualitative read-through: Disney retains powerful brand equity and customer loyalty, especially in parks and experiences. Employee sentiment is healthy but not outstanding, suggesting a company with strong assets but also meaningful internal complexity and bureaucracy.

Final recommendation

Price zone

Interpretation

Below US$90

More attractive watchlist/buy zone for a value investor.

US$95-US$110

Fair value zone based on base-case valuation work.

Above US$115-US$120

Less attractive unless earnings growth accelerates materially.

Recommendation: Watchlist / Hold. Disney is a quality recovery/value investment, but the current price does not provide a wide margin of safety. The stock is most attractive if you believe management can keep improving streaming profitability, protect parks economics, grow earnings, and maintain disciplined capital returns.

Key risks to monitor

· Streaming competition and the sustainability of direct-to-consumer profitability.

· Parks demand, pricing power, and capital expenditure intensity.

· Continued pressure in linear TV and the timing of ESPN transition plans.

· Content execution: hit rate, franchise fatigue, and production costs.

· Whether buybacks are made at attractive prices rather than simply supporting EPS.

Sources and assumptions

· The Walt Disney Company FY2025 Annual Report.

· The Walt Disney Company Q2 FY2026 earnings materials.

· Market data reference for DIS price, market capitalisation, EPS and P/E as at 23 June 2026.

· Public customer loyalty/NPS estimates from Comparably.

· Public employee sentiment estimates from Glassdoor.

· Valuation assumptions are approximations for screening purposes and are not financial advice.

Alan Sew Hoy

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