Should You Hold DIS Stock Heading into Earnings?

“Is the DIS stock a good buy right now?”. This analysis uses 2 valuation methods to determine a DIS Stock Forecast, which can help us answer this popular question.

The Walt Disney Company (NYSE: DIS) is one of the most well-known companies in the Entertainment industry. This analysis will examine Disney’s financial metrics to determine a price prediction for the DIS stock.

Note: Stock forecasting is hard, neither I nor Wall Street Analysts can accurately predict stock prices, and if we could we would be extremely wealthy. However, in this analysis, I will use the available data to determine a reasonable DIS stock forecast to make us more informed about a potential DIS stock investment.

My DIS Stock Forecast for 2023 is $105.26

The Walt Disney Company price prediction of $105.26 is a result of 2 main valuation methods (averaged for a final price target). I’ll dive into the approach to show you how I “predicted” a stock price of $105.26 for DIS.

  1. DIS Financial Growth Metrics
  2. DIS Comparable Companies Analysis

Using PE Ratio and EPS to Arrive at a DIS Stock Forecast

DIS’s forward Earnings Per Share for 2023 is currently 5.48. Additionally, Disney’s forward P/E Ratio has been estimated to reach 19.97by 2023. By having both DIS’s forward P/E and EPS, we can multiply them together to reach a DIS stock forecast of $109.44 per share. This represents a very small upside for the DIS stock over the next 6–12 months but we know that the DIS stock is likely to be at/near fair value, which could make it a decent stock to add to your portfolio.

There are other ways to predict the price for DIS but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast DIS’s stock price.

DIS Stock Forecast for 2023 Using Comparable Analysis

Who are DIS’s Competitors?

In order to undergo a comparable analysis, we need to outline DIS’s main competitors. These competitors need to have; a stock, valid financial ratios, operations similar to DIS, and a market cap similar to DIS (if possible).

Keeping this in mind, here are DIS’s closest competitors:

TM, NKE, BABA, MCD, LOW, HD, F, GM, TJX, STLA

Using a Comparable Analysis to Determine a DIS Price Forecast

DIS’s P/S ratio is 2.49, compared to the average P/S ratio of DIS’s peers being 1.38. This implies that DIS is overvalued and their share price should change by a factor of -44.46% to be at fair value (based on DIS’s P/S compared to the P/S of their peers).

DIS’s Quick Ratio ratio is 0.91, compared to the average Quick Ratio of DIS’s peers being 0.7. This implies that DIS is undervalued and their share price should change by a factor of 29.89% to be at fair value (based on DIS’s Quick Ratio compared to the Quick Ratio of their peers).

Overall, DIS stock is overvalued and needs to experience a change in the stock price of (an average of) -7.29% to be considered “at fair value”. Applying this percentage change to DIS’s current price of $109.02 implies a forecasted price of $101.07.

By taking a simple average of the EP & P/E, and the comparable valuations, we arrive at a price target of $105.26/share. This implies that the DIS stock is slightly overvalued and needs to experience a share price decrease of -3.45% in order to be considered to be “at their fair value”.

What About the DIS Analyst Ratings?

Currently, there are a total of 48 analyst ratings for DIS, which are distributed as follows:

42 Buys

6 Holds

0 Sells

As you can tell 87.5% of analysts have rated the DIS stock as a ‘buy”. These DIS analyst ratings exhibit an overall bullish sentiment, with analyst “buy” ratings forming a majority of total ratings given. This differs from the conclusion that I arrived at through averaging my 2 valuation methods (which is fine).

Final Thoughts About My DIS Stock Forecast

By overviewing the information provided throughout this analysis, we can aim to answer the most important question “Is the DIS stock a buy?”

Considering my DIS stock forecast is $105.26 per share forecasting a slight downside potential, the DIS stock price currently sitting at $109.02, and the overall bullish analyst sentiment for the DIS stock, I would disagree with the majority of analysts and say DIS is a hold and potentially even a sell.

Let me know what you think, happy to dive into other aspects of DIS to help you make an informed investment decision.

Originally published at https://utradea.com.

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