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Is Disney a Buy Now? | The Motley Fool

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AccessibilityLog InHelpJoin The Motley FoolAccessibility MenuJoin Over Half a Million Premium Members And Get More In-Depth Stock Guidance and ResearchBy Lawrence Rothman, CFA–Nov 3, 2023 at 10:00AMMarket Cap$154BToday's Change(1.73%)&nbsp;$1.44Current&nbsp;Price$84.73Price as of November 3, 2023, 9:44 a.m. ETYou’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn MoreTiming the market has proven exceedingly difficult. After all, no one has a crystal ball that tells you when a stock has bottomed out or reached a zenith. But fundamental analysis of individual companies can improve long-term investors' odds of success. It requires examining a company's prospects and valuation to determine whether the stock represents a buying opportunity.Walt Disney has hit a rough patch and is worth such an examination. Should you buy the media giant's stock now?Image source: Getty Images.Back in February, CEO Bob Iger promised that Disney's streaming business would become profitable. And he's made progress on that front. The direct-to-consumer unit reported a $512 million loss in the fiscal third quarter (ended July 1), about half the year-ago figure. Revenue rose by 9% to $5.5 billion.Paid subscribers fell by over 5% from the previous quarter, to 219.6 million, across its streaming services. Management has decided to implement another price increase in an effort to boost revenue per paid subscriber. While competitors like Netflix have been boosting prices, the effect on Disney's subscriber growth, already under pressure, remains unclear.Disney's linear networks, consisting of cable and television networks such as Disney Channel, ESPN, and ABC, continues to struggle. In fact, Iger has been looking into selling the business, or at least some of the assets. In Q3, the business saw a revenue decline of 7% from a year ago, and operating profit dropped by 23%.While some of the networks, such as A&amp;E, FX, and National Geographic, may not fit with the rest of Disney's business, it's hard to separate certain assets like ABC and the Disney Channel from the overall brand. It's tough to see what the business may look like until management makes certain decisions.It's not all uncertainty and bad news for Disney's business, however. Theme parks have been a bright spot. In the third quarter, the parks, experiences, and products division enjoyed a 13% revenue increase. Theme park admission revenue grew by 18%, with more than two-thirds coming from increased attendance.Still, should the economy dip into a recession, theme park attendance and spending will undoubtedly get impacted.Disney's stock price has fallen by 7.1% since the start of the year compared to the S&amp;P 500's 8.5% gain. That has brought down the stock's valuation. The shares trade now at a price-to-sales (P/S) ratio of 1.7, down from about 2.5 earlier this year. By contrast, the S&amp;P 500 sells at a 2.3 P/S multiple.While Disney stock may seem like a bargain at this level, it's important to remember the company's challenges. With intense competition in streaming, price increases alone won't achieve profitability. And the linear networks business faces an uncertain future as it's unclear what will remain if and when management sells assets.With that, I'd take a pass on Disney's stock until the company has tangible signs of progress such as achieving sustained profitability in the streaming business and seeing how the linear network business shapes out.Get Started Now4 Dates for Disney Stock Investors to Circle in NovemberDisney Could Be Headed for a $10 Billion Payday. Should You Buy the Stock?3 Top U.S. Stocks to Watch in NovemberIs This Popular Stock a Trick or a Treat?2 Top Stocks Down Between 47% to 84% to Buy NowMarket-beating stocks from our award-winning analyst team.Stock Advisor Returns476%&nbsp;S&amp;P 500 Returns125%Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/03/2023.Discounted offers are only available to new members. Stock Advisor list price is $199 per year.Cumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.View Premium ServicesCurrent

AccessibilityLog InHelpJoin The Motley FoolAccessibility MenuJoin Over Half a Million Premium Members And Get More In-Depth Stock Guidance and ResearchBy Lawrence Rothman, CFA–Nov 3, 2023 at 10:00AMMarket Cap$154BToday's Change(1.73%)&nbsp;$1.44Current&nbsp;Price$84.73Price as of November 3, 2023, 9:44 a.m. ETYou’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn MoreTiming the market has...

Is Disney a Buy Now? | The Motley Fool

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