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Disney stock has had a rough few years. Covid did a lot of damage to their park business, and they are in a lot of debt from their acquisition of Fox. Covid came at the worst time for them as their park business was definitely needed to help pay for all their debt. Disney is currently down 6% over the last 5 years and almost 37% year to date. Disney was recently in the news after they announced that Bob Iger would once again be returning as CEO of the company replacing Bob Chapek.
Many people are very happy to see Chapek go and Iger replace him. While I am definitely not saying that Chapek did a fantastic job as CEO, I do think he took the job at literally the worst possible time. I personally feel like he is being blamed for a lot of problems that there just wasn’t any good answers to. Disney’s parks shutting down was unavoidable. Theaters closing was not his fault. The debt that Disney has was not created by Chapek. Again, I am not saying that Chapek was a good CEO, but I do think he is being blamed for more things than he deserves. That said, I do like Bob Iger as CEO, and with him in charge once again, let’s take a look at Disney’ stock.
First, Disney is trading at a price/earnings ratio of 56.57. While that might seem very high, I will mention that Disney is very much still recovering from COVID. They are also investing a lot of money into their streaming platform Disney+ right now also. I expect Disney to increase their earnings over the next few years. They currently have a market cap of $176 billion, which I do think makes them undervalued. Disney does not currently offer a dividend. Under Iger, I do think that Disney will likely reinstate its dividend though.
I am personally very bullish on Disney+. I think that Disney is in a very strong position for streaming by owning ESPN+, Hulu, and Disney+. While Disney+ is currently not profitable, I think that it will provide a lot of revenue for them over the next several years and will eventually be a profitable entity of theirs.
I do think that this stock could be a buy. I think it’s undervalued right now, and I think the company does have a lot to be excited about. I would like for them to reinstate their dividend, and I am slightly worried about their debt.
It’ll be very interesting to see how the company performs with Bob Iger back as CEO.
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