Image Source: Pixabay
 

Each week, we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: The Walt Disney Company (DIS).

Profile

Disney is a diversified global entertainment conglomerate spanning media networks, streaming, content production, theme parks, consumer products, and cruise/hospitality assets. Its revenue ecosystem combines subscription streaming (Disney+, Hulu, ESPN+), theatrical releases, linear networks, and experiential park attendance, enabling deep cross-brand monetization and IP leverage.

Disney’s asset base blends IP ownership, long-duration content franchises, physical parks, and consumer licensing, driving optionality across distribution channels. The company is undergoing strategic restructuring to improve streaming unit economics, rationalize content spend, and strengthen balance sheet flexibility while repositioning its media portfolio toward higher-margin engagement platforms.

DCF Analysis

Inputs:

Discount Rate: 10%
Terminal Growth Rate: 3%
WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $10.5 → PV: $9.6
2026: $11.0 → PV: $9.1
2027: $11.5 → PV: $8.7
2028: $12.0 → PV: $8.3
2029: $12.5 → PV: $7.8

Total Present Value of FCFs = $43.5B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $12.5B:

TV = (12.5 × 1.03) ÷ (0.10 − 0.03) = $183.9B
Present Value of Terminal Value = $114.7B

Enterprise Value

Enterprise Value = 43.5B + 114.7B = $158.2B

Net Debt

Cash & Equivalents: $5.8B
Total Debt: $44.9B
Net Debt = $39.1B

Equity Value & Per-Share Value

Equity Value = 158.2B – 39.1B = $119.1B
Ordinary Shares Outstanding: ~1.79B
Intrinsic Value per Share ≈ $67

Conclusion

DCF Value: $67
Current Price: ~$111
Margin of Safety: –40%

Disney remains a globally scaled entertainment platform with durable IP assets, high-barrier experiential businesses, and multi-channel monetization levers. Its Parks & Experiences segment continues to generate robust operating cash flows, while strategic restructuring aims to expand streaming profitability and rationalize capital allocation across content verticals.

However, under conservative DCF assumptions, DIS currently trades above intrinsic value, reflecting a strategic transformation premium and long-term brand monetization optionality. While Disney maintains enviable IP defensibility, worldwide distribution capabilities, and recurring park demand, investors face a valuation backdrop that implies meaningful execution risk and limited margin of safety for value-focused buyers.

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