Key Insights for Investors on Walt Disney Company (DIS)

The Walt Disney Company (DIS) has recently been trending on Zacks.com's list of the most searched stocks. This is indicative of a high level of investor interest in the entertainment giant, making it worthwhile to consider some key factors that could influence its stock performance in the near future. 
 
Over the past month, Disney shares have returned -12.7%, compared with a -1.2% change in the Zacks S&P 500 composite. The broader media conglomerate industry, where Disney belongs, has also lost 8.6%. Given these figures, an important question arises regarding where Disney’s stock might be headed next. 
 
While sudden changes or rumors about substantial shifts can make a company's stock 'trendy' and lead to immediate price alterations, fundamental facts usually prevail over time when considering long-term investment decisions. 
 
At Zacks Investment Research, we prioritize evaluating any changes in a company's earnings projections, as we believe this determines its fair value for its stock based on the anticipated future earnings stream. If analysts revise their earnings estimates for a company due to positive business trends, it implies an increase in fair value, which can attract investors, leading to potential price appreciation. 
 
Disney is expected to post earnings of $1.19 per share for the current quarter, which represents a year-over-year growth rate of +15.5%. In addition, consensus estimates point towards significant growth rates for both current and next fiscal years at +26.3% and +15.9%, respectively. 
 
Our proprietary ranking tool, The Zacks Rank, effectively utilizes power from revisions made by sell-side analysts covering stocks, resulting in a more conclusive indicator about near-term prices’ trajectory, currently suggesting HOLD (#3) status for Walt Disney Co. 
 
Revenue generation remains another crucial aspect besides earning growth since, without revenue increments, companies find it hard to sustain profits over longer periods, thereby adversely affecting their financial health over time. 
 
For Disney specifically, the consensus sales estimate stands at $22.86 billion for the current quarter, indicating a year-over-year growth of +2.4%. Additionally, estimates for the current and next fiscal years stand at $91.03 billion and $95.58 billion, respectively, suggesting annual changes of +2.4% and +5%. 
 
Disney’s last reported quarterly revenues stood at $22.08 billion, which was marginally lower than the consensus estimate, thereby representing a negative surprise of -0.23%. However, the EPS surprise came in positive at +8.04%. 
 
Valuation remains another important aspect to consider before making any investment decision, as it provides insights regarding the intrinsic value of the underlying business along with the company's future prospects. 
 
Comparing Disney's valuation multiples—price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF)—against its historical values can provide an idea of whether a stock is fairly valued or not relative to its own history, while comparing the same parameters against peers helps understand how reasonably priced the stock is. 
 
Our Zacks Value Style Score, which grades stocks on both traditional and unconventional valuation metrics from A to F, has graded Disney B, implying that it trades at a discount compared with its industry peers. 
 
In conclusion, while we recommend investors pay attention to market buzz about Disney due to various reasons discussed above, including earnings revision trends, sales estimates, etc., our HOLD (#3) rank suggests near-term performance might be in line with broader markets' trends.