Walt Disney Co. (NYSE: $DIS), commonly known as Disney, stands as a multimedia entertainment and media conglomerate, encompassing diverse businesses such as media networks, theme parks, studio entertainment, consumer products, and interactive media. Renowned subsidiaries and brands under Disney’s umbrella include Walt Disney Studios, Pixar Animation Studios, Marvel Entertainment, Lucasfilm, ESPN, ABC, and Disney Theme Parks. Forbes recognizes it as one of the world’s largest media companies and a leading player in the United States.
Despite a remarkable 11% surge in stock price over the last three months, Disney’s financial performance exhibits inconsistencies across key metrics, raising questions about the sustainability of its current momentum.
Of particular concern is Walt Disney’s low Return on Equity (ROE) of 3.0%. ROE is a crucial financial metric that gauges a company’s profitability in relation to shareholders’ equity, indicating how effectively it utilizes equity capital for profit generation. In the trailing twelve months ending in September 2023, Disney’s annual return stands at 3.0%, implying a profit of $0.03 for every $1 of shareholders’ capital invested. This figure falls significantly below the industry average of 14%, reflecting a subpar performance for a major media company. Additionally, Disney has witnessed a substantial 35% decline in net income over the past five years.
In its Q4 and FY23 earnings report, Disney reported a 5% increase in revenue compared to the same quarter the previous year, with a 7% growth for the entire year compared to the previous year.
As of the latest update, Walt Disney stock (NYSE: $DIS) is trading at $91.31, reflecting a 0.60% increase from the previous closing price of $90.90 per share. The market capitalization is currently $167.072B, with a trading volume of 2,608,874. The chart below outlines critical areas of support and resistance for Disney stock.
Investors should approach investing in The Walt Disney Company with caution due to its low ROE compared to industry standards. However, positive year-to-year growth in revenue and net income, coupled with a 65% favorability among institutional investors, suggests long-term investment potential for those seeking profitability over time.
