DIS - Disney's Q2 Earnings Sparkle With Shares Still Trading At An Undervaluation
2024-06-13 09:23:10 ET
Summary
- Disney reported strong Q2 results with underlying profitability improvements overshadowed by a $2.1 billion goodwill impairment.
- Multiple successes such as profitable DTC business along with great performance by the experiences division suggest Disney's core products continue to resonate with consumers.
- Shares appear 22% undervalued after the recent market sell-off suggesting a real GARP opportunity could exist in the company's stock.
- Closure of the proxy battle and legal dispute with Ron DeSantis have reduced Disney's ESG risk profile in my opinion.
- Buy rating reiterated.
Investment Thesis
The Walt Disney Company ( DIS ) produced a pretty solid set of Q2 results where underlying profitability improvements were obscured from view by a massive $2.1 billion one-off impairment.
Without the impacts of these charges, Disney would have generated what I believe is a wonderful set of earnings data with multiple operational efficiency improvements along with their DTC business finally becoming profitable helping to bolster net income.
The current share price suggests a 22% undervaluation given my base-case intrinsic value calculation. This is up from just a 14% undervaluation in February 2024 (my last update on DIS) which has come primarily as a result of a pullback in the stock's price. ...
Disney's Q2 Earnings Sparkle With Shares Still Trading At An Undervaluation