What is DIS's Intrinsic value?

Walt Disney Co (DIS) Intrinsic Value Analysis

Executive Summary

As of September 5, 2025, Walt Disney Co's estimated intrinsic value ranges from $58.25 to $186.43 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $186.43 +56.9%
Discounted Cash Flow (5Y) $158.61 +33.5%
Dividend Discount Model (Multi-Stage) $112.16 -5.6%
Dividend Discount Model (Stable) $125.00 +5.2%
Earnings Power Value $58.25 -51.0%

Is Walt Disney Co (DIS) undervalued or overvalued?

With the current market price at $118.81, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Walt Disney Co's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.8 0.93
Cost of equity 7.5% 10.1%
Cost of debt 4.0% 4.9%
Tax rate 26.8% 30.5%
Debt/Equity ratio 0.22 0.22
After-tax WACC 6.7% 8.9%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $91,361 (FY09-2024) to $120,469 (FY09-2034)
  • Net profit margin expansion from 6% to 18%
  • Capital expenditures maintained at approximately 6% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $159 $322,066M 84.5%
10-Year Growth $186 $372,076M 69.8%
5-Year EBITDA $189 $376,620M 86.8%
10-Year EBITDA $208 $411,383M 72.7%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 14.9%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.8%
  • Long-term growth rate: 3.5%
  • Fair value: $112.16 (-5.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.1% (Low) to 7.5% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $59 to $191
  • Selected fair value: $125.00 (5.2% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $10,836M
Discount Rate (WACC) 8.9% - 6.7%
Enterprise Value $121,887M - $161,364M
Net Debt $36,896M
Equity Value $84,991M - $124,468M
Outstanding Shares 1,798M
Fair Value $47 - $69
Selected Fair Value $58.25

Key Financial Metrics

Metric Value
Market Capitalization $213612M
Enterprise Value $250508M
Trailing P/E 18.49
Forward P/E 27.45
Trailing EV/EBITDA 16.10
Current Dividend Yield 80.91%
Dividend Growth Rate (5Y) -3.68%
Debt-to-Equity Ratio 0.22

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $55.93
Discounted Cash Flow (5Y) 25% $39.65
Dividend Discount Model (Multi-Stage) 20% $22.43
Dividend Discount Model (Stable) 15% $18.75
Earnings Power Value 10% $5.82
Weighted Average 100% $142.59

Investment Conclusion

Based on our comprehensive valuation analysis, Walt Disney Co's intrinsic value is $142.59, which is approximately 20.0% above the current market price of $118.81.

Key investment considerations:

  • Strong projected earnings growth (6% to 18% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.22)

Given these factors, we believe Walt Disney Co is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.