Why Walt Disney Stock Remains Fundamentally Overvalued

Year-over-year, Walt Disney stock is down more than 24%

facebook twitter linkedin

Walt Disney Co (NYSE:DIS) is down 1.6% to trade at $138.70 at last check, despite announcing it will reintroduce traditional character greetings at its U.S. theme parks as soon as Monday, April 18. The security has had a rough go on the chats over the past couple of months, with the 80-day moving average guiding DIS lower, while the $129 level caught pullbacks earlier this month and back in January. Year-over-year, Walt Disney stock is down 24.8%.  

DIS 60 Day


It appears be a good time to speculate on DIS' next move with options. The stock's Schaeffer's Volatility Index (SVI) of 25% ranks in the 14th percentile of its 12-month range. In other words, options players are pricing in low volatility expectations at the moment. 

Digging deeper, the media name's trailing 12-month revenues and net income have increased 8% and 54%, respectively, since 2021. The company is also estimated to grow earnings by 29.6%, and revenues by 11.6% over the next year.

However, Walt Disney has struggled to grow on the bottom-line in recent years, experiencing back-to-back years of annual net income declines between 2018 and 2020. For 2019, it saw a 12% decrease in net income, reporting $11 billion, while in 2020 it saw $2.86 billion in net losses.

In addition, DIS holds a relatively weak balance sheet with $14.63 billion in cash, and $57.63 billion in total debt. Disney stock also offers a rich valuation, despite having high growth expectations this coming year, sitting at a forward price-earnings ratio of 33.33 and a price-sales ratio of 3.57. In other words, DIS is overvalued from a fundamental point of view.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners