The Walt Disney Company
The business, in plain English
Three businesses under one castle
Disney turns stories into money in more ways than any company on earth. It makes films and series (Disney, Pixar, Marvel, Lucasfilm, 20th Century, National Geographic) and sells them in cinemas, on its own streaming services (Disney+ and Hulu) and on its television channels. It turns the same characters into theme parks, cruise ships, hotels, toys and clothes. And it owns ESPN, America's dominant sports network. In fiscal 2025 it took in $94.4 billion. It is worth about $184 billion.
Since 2023 it has reported three segments: Entertainment (studios, streaming and the general-entertainment TV channels), Sports (ESPN) and Experiences (parks, resorts, cruises and consumer products). The last is the most profitable and the one the new chief executive ran before he got the top job.
★★ The carousel, the screen — and the stadium
Where the profit comes from, how streaming turned, and what sport costs
The carousel. In the quarter to 27 June, Experiences earned $3.0 billion of operating income, up 20%, on revenue of about $10 billion — 54% of all segment profit. Parks are the closest thing Disney has to a toll bridge: a family that has watched the films wants to visit, and nobody else can sell them that visit. Disney is spending accordingly — roughly $60 billion over about a decade on new attractions, lands and cruise ships, which is why capital spending is about $9 billion this year.
The screen. In fiscal 2022 Disney's streaming business lost $4.0 billion. By fiscal 2024 it had broken even. In the third quarter of fiscal 2026 it earned $712 million, a 12.9% margin, on subscriber growth and price increases, and Entertainment's operating income rose 64%. The long, expensive bet on Disney+ has, at last, started to pay — though margins remain well below those of the old cable business it is replacing.
The stadium. Sports earned $858 million, down 17%, as programming costs rose. ESPN is the most valuable sports media brand in America and launched a full direct-to-consumer service in August 2025, but sports rights are bid up by every technology giant, and the cable bundle that funded ESPN for decades keeps shrinking.
★ Which profit? Reported EPS in the quarter was $1.51; adjusted, $2.06. The gap was an $812 million write-down of Disney's stake in A+E, $334 million of amortisation from the Fox and Hulu purchases, and $88 million of severance. For the full year Disney guides adjusted EPS up about 12% (16% including a 53rd week) and "double-digit" growth again in fiscal 2027.
The moat
Stories that last a century, and places no one else can build
Disney's moat is its intellectual property — characters that have been loved across generations, from Mickey Mouse to Marvel — and the unique ability to turn them into physical experiences. A rival studio can make a hit film; it cannot build Disney World around it. That combination is why the parks can raise prices year after year and still fill.
The moat is narrower than it was in the media business. Streaming competition is intense, audiences are fragmenting towards YouTube and social video, and the cable channels that were once a license to print money are in slow decline. We score the moat 8: immense in parks and franchises, ordinary in television.
Management & ownership
Verified on the day of writing
The succession, after the troubled handover of 2020–22 that ended with Bob Iger's return, was handled carefully: D'Amaro was named in February and took over in March, with Iger staying as a senior adviser and director until the end of 2026. The board is chaired by James Gorman, formerly of Morgan Stanley. Capital allocation has improved: dividends restored (and raised 50% last November), buybacks of at least $9 billion this year. The record of the past decade is less good — the $71 billion Fox purchase has earned low returns, visible in a return on invested capital of about 6%.
The numbers — and three things our feed gets wrong
Sourced from the live pull · fiscal years to early October
| Metric | Value | Read |
|---|---|---|
| Revenue FY2025 · fiscal Q3 2026 | $94.4bn · $25.2bn (+7%) | ▲ Steady |
| Adjusted EPS, fiscal Q3 · nine months | $2.06 (+28%) · $5.25 (+9%) | ▲ Accelerating |
| Segment operating income, fiscal Q3 | $5.6bn (+21%) | ▲ Parks and streaming |
| Operating cash flow FY26 guide · capex | $19bn+ · ~$9bn | ◆ Heavy park investment |
| Buybacks FY26 target | at least $9bn | ▲ ~5% of market value |
| Net debt · net debt / EBITDA | ~$40bn · 1.8× | ▲ Manageable |
| Return on invested capital | 6.4% | ▼ The Fox legacy |
| What the feed says | Value | What is true |
|---|---|---|
| EPS FY2025 (GAAP) | $6.85 | Includes a large one-off tax benefit in fiscal Q3 2025 ($2.92 that quarter). Adjusted EPS, the company's guide base, was lower. |
| Product segments | FY2020 data | The feed's latest revenue split is six years old and predates the current three segments. |
| DCF value | $86.52 | Built on free cash flow depressed by a park-building cycle. Not used. |
The dividend
Restored, then raised by half
Disney suspended its dividend in 2020, restored it at $0.30 in late 2023, and has raised it steadily since; in November 2025 the board lifted the semi-annual payment by 50% to $0.75, $1.50 a year. At today's price the yield is about 1.4%. It takes roughly a fifth of adjusted earnings and about a quarter of guided free cash flow, so it is safe; buybacks, at $9 billion or more this year, are the larger return to owners.
Risks, lawsuits & controversies
Verified afresh, 28 September 2026
First, the declining bundle. The cable channels that once financed everything lose subscribers every year, and ESPN must now compete for sports rights with the richest technology companies in the world. The shift to direct-to-consumer services is working, but it is not yet as profitable as the bundle was.
Second, the parks are cyclical. They are Disney's best business and its most economically sensitive one: a recession that hits family budgets would show up quickly in attendance and spending, just as the company is spending heavily to expand them.
Third, the courtroom — modest. Subscribers of streaming live-TV services sued Disney for bundling ESPN with its other channels; Disney agreed a settlement of $50 million for YouTube TV and DirecTV Stream subscribers, and in September 2026 a court sent the Fubo subscribers' claims to individual arbitration, dismissing the class claims. We see nothing material pending.
★ Valuation
Cheaper than the franchise deserves
| Yardstick | Value | Reading |
|---|---|---|
| Share price · market value | $105.52 · ~$184bn | 52-week range $92.19–$117.09. |
| P/E — FY2026e · FY2027e · FY2028e | 15.3× · 14.1× · 12.6× | Consensus $6.91, $7.50, $8.39 (adjusted). |
| EV / EBITDA | ~9.7× | Enterprise value ~$225bn. |
| Free cash flow yield (FY26, approx.) | ~5.5% | Operating cash flow $19bn+ less ~$9bn capex. |
| Our value range | ~$112–135 | 15–18× fiscal 2027 earnings for a franchise growing earnings at double digits. |
| Street target (mean · range) | $125.67 · $111–164 | +19%. |
What does $105.52 assume? That growth fades quickly after this year — that the parks slow, streaming margins stall and sport eats the rest. If Disney merely delivers the double-digit growth it has guided for fiscal 2027, the shares at 14 times are cheap; if the new CEO also finds a way to make streaming margins approach the old cable ones, they are very cheap. The risk is a consumer recession arriving in the middle of a $60 billion building programme.
I have admired Disney for most of my life for a simple reason: it owns things that people love and will pay for again and again. A child who watches a film wants the toy, then the visit, then — twenty years later — wants to bring their own child. No accountant can put that on a balance sheet, and no competitor can copy it.
For several years Disney made that hard to see. It spent heavily on a streaming service that lost four billion dollars in one year, it paid a great deal for Fox, and it went through an unhappy change of leadership. Its television channels, once a money machine, began a slow decline.
Look at it now. The parks and cruises earned three billion dollars last quarter, up a fifth. The streaming business that lost billions earns about seven hundred million a quarter. Adjusted earnings are expected to grow about sixteen per cent this year and at double digits next. The dividend has been raised by half and the company is buying back at least nine billion dollars of its shares. And the new chief executive is the man who ran the parks — Disney's best business — which I take as a good sign of what the board values.
Yet the market prices Disney at about fourteen times next year's earnings, lower than for most of the last twenty years. It is worried about ESPN, about cable, about a new boss. Those worries are fair, but they concern the smaller part of the profit. The larger part — the parks and the stories — is as strong as it has ever been.
Accumulate. Watch the parks in the next recession, and watch whether streaming margins keep climbing. If the market offers Disney near ninety-two dollars, buy with both hands.
— The Buffett Lens · Dividend Line Research · riding the carousel, watching the screen
The Carousel Pays for the ScreenOne of the world's great franchises — parks +20%, streaming finally profitable, adjusted EPS guided up double digits — at ~14× fiscal 2027 earnings, below our ~$112–135 range, with buybacks of $9bn+ and a dividend raised 50%. The worries (ESPN costs, cable decline, a new CEO) concern the smaller part of the profit. Accumulate; buy with both hands near ~$92. Fiscal Q4 results in mid-November.
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