Quarter after quarter, more pieces of the puzzle are falling into place for The Walt Disney Co. (DIS). Despite this continued progress and strengthening fundamentals, the stock price still sits roughly where it traded in the summer of 2015. Management is acting accordingly, notes Tom Hayes, editor of HedgeFundTips.
Quarterly revenue just rose 7% to $25.2 billion on broad-based growth across all three segments. Total segment operating income grew 21% to $5.5 billion, ahead of management’s prior guidance, while adjusted earnings per share jumped 28% to $2.06. That was well ahead of the $1.86 consensus.
(Editor’s Note: Tom is speaking at our 2026 MoneyShow Masters Symposium Sarasota, scheduled for Nov. 30 – Dec. 2. Click HERE to register.)
The Walt Disney Co. (DIS)
Given the disconnect between improving fundamentals and the stock price, management raised its full-year buyback target to at least $9 billion from the original $7 billion guide.
Keep in mind that Disney stock is no stranger to long stretches of grinding sideways. Since 1973, there have been three, each featuring a peak-to-trough drawdown of more than 60%. All three were driven by the same two conditions: a stalled creative engine and unresolved leadership.
But both prior periods ended once those problems were fixed. That set the stage for massive runs of outperformance, with Disney returning 2,223% from 1985 to 1998 and 252% from 2011 to 2015.
So, what will it take for Disney to finally re-rate? We think it comes down to consistent execution. If management delivers on its earnings growth outlook, then Disney is a double-digit earnings compounder trading at a fraction of the market multiple, a disconnect we don’t think will last for very long.
