Walt Disney Co (DIS) — Executive Summary Walt Disney Co is a diversified global entertainment and media company demonstrating strong cash flow recovery and earnings growth, supported by improving profitability metrics and manageable capital structure, though near-term liquidity concerns and volatile cash flows warrant close monitoring. Financial Highlights The company’s trailing twelve-month opera
Walt Disney Co is a diversified global entertainment and media company demonstrating strong cash flow recovery and earnings growth, supported by improving profitability metrics and manageable capital structure, though near-term liquidity concerns and volatile cash flows warrant close monitoring.
The company’s trailing twelve-month operating cash flow stands at $15.63 billion, with a trailing P/E ratio of 16.8x. Strong per-share and earnings growth are evident: a five-year diluted EPS CAGR of 46.91% and revenue-per-share CAGR of 9.51%. Book value per share has grown at 5.23% annually, while three-year EPS CAGR is 54.53% ([EPS Diluted & Revenue per Share], [Revenue & Net Income]).
Recent profit margins show gross margin at 50.8%, operating margin at 33.4%, and net margin at 12.8% for the latest quarter. Operating cash flow of $15.63B exceeds reported net income of $12.25B on a trailing twelve-month basis, with a cash conversion ratio of approximately 1.28 ([Profit Margin Trends], [Earnings Quality Analysis]).
Interest coverage is healthy at 6.42x, and debt-to-equity remains manageable at 0.43. Net debt is effectively zero relative to owner earnings, reducing near-term debt service pressure. On a per-share basis, revenue per share is $53.04 and diluted EPS is $6.79. One-year revenue-per-share growth has slowed to 3.5%, while EPS growth remains high at 118.2%, indicating recent operating leverage and episodic earnings variability ([EPS Diluted & Revenue per Share], [Per-Share Levels]).
Watch the trajectory of operating cash flow (current TTM: $15.63B, prior peak: $19.14B), net income and margin trends (net margin 12.8%, operating margin 33.4%), revenue-per-share momentum (current $53.04, 1-year growth 3.5%), liquidity (current ratio 0.67), leverage service metrics (interest coverage 6.42x, debt/equity 0.43), return on equity (TTM 11.3%), and shifts in the P/E multiple (most recent 16.8x) to assess if recent earnings and cash flow improvements are sustainable ([Strategic Capital Allocation], [Return on Equity (ROE)], [Price-to-Earnings (PE) Ratio Trend]).
The foundation of business quality and long-term value creation
Walt Disney Co's revenue has been in a narrow range of roughly $22B–$24B across most recent quarters before a step up in the latest period. From $23.62B and $23.65B in the quarters ending March and June 2025, revenue dipped to $22.46B for the quarter ending September 27, 2025, then rose to $25.98B for the quarter ending December 27, 2025, marking the highest reported quarterly revenue in the most recent year-long sequence.
Net income has shown greater volatility than revenue over the same span. After a $5.26B net income for the quarter ending June 28, 2025, net income fell to $1.31B for the quarter ending September 27, 2025 and recovered to $2.40B for the quarter ending December 27, 2025. The most recent quarterly revenue was $25.98B and the most recent quarterly net income was $2.40B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Dec 2024 to Dec 2025
Revenue composition by disclosure category for the latest period
The Company generates revenue from subscription fees paid by consumers for its DTC streaming platforms as well as fees it charges to MVPDs and other distribution partners for channel carriage and licensing rights.
Ad revenues are earned from advertising space sold across Linear Networks and DTC services, supporting a significant portion of its viewing platforms.
Revenue from affiliate fees is based on contractual agreements with cable, satellite, and over-the-top providers for channel distribution rights and programming access.
The Company earns rental and licensing revenue from theatrical film releases distributed to movie theaters globally.
Revenue is generated through licensing content for TV, Video on Demand, and physical media distribution, encompassing licensing fees and electronic and physical sales.
Earnings stem from licensing music, stage rights, and providing post-production services including special effects and sound production.
Additional revenues come from live event ticket sales, licensing IP for stage use, and royalty sharing across segments for merchandise licensing.
The Company recognizes its share of earnings from investments in other media and entertainment entities through equity accounting.
Revenues from sports include fees for pay-per-view events, sub-licensing content rights, and licensing the ESPN brand across platforms.
Ticket sales for theme park entry and premium experiences contribute to revenue from Parks & Experiences.
Earnings come from booking accommodations, cruises, and vacation ownership interests.
On-site retail, food, and beverage sales generate substantial recurring revenue streams.
Royalty income from licensing Disney IP on branded merchandise across multiple categories.
Revenue from direct online sales, physical stores, and wholesale channels.
Income from licensing arrangements, sponsorships, real estate leasing, and royalties from international operations.
Earnings derived from providing management services and licensing fees for third-party resorts and cruise operations carrying the Disney brand.
Sales from publishing children’s books, comics, and related media distribution.
The primary customers are individual consumers subscribing to Disney’s streaming platforms and bundles.
Revenue from advertising comes from companies buying advertising slots across linear TV and digital streaming services.
Distribution partners including cable and satellite providers who carry or license Disney channels and services.
Local broadcasters and owned stations distributing ABC Network content.
Movie theaters licensing Disney content for theatrical release.
Other video platforms licensing Disney content for distribution on TV and VOD.
Online retailers and digital distributors selling Disney movies and shows in electronic formats.
Cable and satellite providers delivering digital content to consumers.
Physical media retailers and distributors selling DVDs, Blu-ray, and other merchandise.
Companies licensing Disney IP for use on toys, apparel, and other merchandise.
Visitors purchasing tickets, accommodations, cruises, and souvenirs at Disney parks and resorts.
Parties involved in buying into timeshare or vacation club memberships.
Business partners, sponsors, and tenants leasing space within Disney properties.
Third-party entities managing or owning Disney-branded resort and cruise assets.
Investments in related ventures recognized through equity method accounting, impacting overall results.
Operations within the United States span across media, theme parks, resorts, and retail businesses.
Global presence includes channels, parks, resorts, and streaming services in multiple regions worldwide.
Regional operations include joint ventures, investments, and localized distribution in various countries.
Film distribution varies across regions, with a mix of theatrical releases and exclusive streaming availability.
Worldwide licensing and retail networks extend Disney’s brand and content globally.
Distribution is maintained through contractual carriage arrangements with various TV providers and local stations.
The Company’s streaming platforms are sold directly via subscriptions and in bundles, with some MVPD distribution.
Live streaming is available through vMVPD partnerships, broadening access to Disney content.
Film distribution occurs through theaters worldwide and independent local distributors in select markets.
Content licensing for TV, VOD, and internet platforms is a key sales channel.
Digital and physical sales are conducted via online platforms and licensed distribution channels.
Brand licensing extends Disney content and characters into various product categories.
Direct-to-consumer online sales and wholesale channel sales support retail revenue.
On-site ticket sales, reservations, and point-of-sale transactions generate ongoing revenue streams.
Licensing and management fees for third-party-managed resorts and cruise assets.
Revenue from post-production services supports other content production streams.
Collaborative ventures and assets sharing arrangements expand distribution and monetization options.
The Company relies on contractual relationships with MVPDs for carriage and affiliate fee revenues, with those agreements renewed or renegotiated periodically. Exposure to market consolidation and industry changes may impact contractual terms and revenue stability.
Dependence on desirable content and content availability is critical, along with advertising revenue sensitivity to viewership, audience composition, seasonal factors, and overall advertiser demand. Sports advertising is particularly sensitive to sporting seasons and events.
Competition for creative talent, story properties, and production resources is intense, impacting content pipeline and
Analyzing long-term margin stability and competitive positioning
Walt Disney Co's margins over the last five reported quarters show oscillation but a clear improvement in net profitability. Gross margin moved between 44.2% (2025-09) and 60.9% (2025-06) before settling at 50.8% in the latest quarter, while operating margin ranged from 26.7% to 43.6% and is 33.4% most recently. Net profit margin has risen through 2025 from 9.5% (2025-03) to a peak of 13.1% (2025-09) and is 12.8% in the most recent quarter, representing higher net margins than the low single-digit and negative results seen in earlier years.
Historical data show pronounced inflection points: steep negative gross and operating margins during the 2020 pandemic-period quarters (e.g., gross -20.4% and operating -39.8% for the quarter ending 2020-03-29), followed by periods of very high reported gross and operating margins in parts of 2021–2022 and spikes through 2023–2024. The most recent quarter-to-quarter pattern in 2025 is one of fluctuation in gross and operating margins with a generally higher net margin level compared with the immediate pre-2025 periods. The most recent gross margin was 50.8%, the most recent operating margin was 33.4%, and the most recent net profit margin was 12.8%.
Understanding Profit Margins
Between Dec 2024 and Dec 2025, Walt Disney Co converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Walt Disney Co’s trailing-twelve-month operating cash flow has generally exceeded reported net income over the past several quarters. Operating cash flow rose from $14.99B in the 2024 year‑end TTM to a peak of $19.14B in the 2025-06-28 TTM, then retreated to $15.63B in the most recent TTM. Net income moved from mid-single-digit billions at the end of 2024 ($5.62B) into double digits through 2025, increasing to $12.40B in the 2025-09-27 TTM and easing slightly to $12.25B in the latest period.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Walt Disney Co's trailing twelve-month ROE shows a clear upward trend through 2025 after a long period of low single-digit returns. Beginning at 1.7% for the period ending 2024-03-30, ROE rose steadily across 2024 into 2025 and accelerated in 2025 — moving from 8.5% (2025-03-29) to 10.6% (2025-06-28) and then to 11.3% by 2025-09-27, holding at 11.3% for the most recent quarter.
Historically the series includes pronounced volatility: ROE was negative in early 2021 (-5.9% on 2021-01-02 and -5.3% on 2021-04-03) and earlier reached higher levels in 2019 (14.7% on 2019-12-28 and 12.4% on 2019-09-28). The most recent trailing twelve-month return on equity for Walt Disney Co was 11.3% as of period end 2025-12-27.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Walt Disney Co’s operating cash flow on a trailing twelve-month basis rose materially from mid-pandemic levels near $5–8B in 2020–2021 to a multi-year high of $19.14B in the TTM period ending 2025-06-28, then moderated through 2025 to $15.63B in the most recent TTM. That movement marks a clear ramp in operating cash generation through 2024–mid‑2025 followed by a noticeable decline in the latter half of 2025.
Investing cash flow has been consistently negative and became more negative from roughly -$3–5B in earlier years to a trough of -$8.80B in the TTM period ending 2025-03, stabilizing around -$8B in subsequent quarters. Financing cash flow shows persistent outflows with a deepening in 2025 (a TTM outflow of -$10.37B in 2025-09) before easing to -$7.38B in the latest TTM. The most recent trailing twelve-month values are: Operating Cash Flow $15.63B, Investing Cash Flow $-8.21B, Financing Cash Flow $-7.38B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Walt Disney Co's trailing twelve-month P/E has swung substantially over the past several years, with pronounced spikes in 2020–2021 and another large peak at 129.4x on 2024-03-30. Before those spikes, the ratio was in the high-teens to low-20s (for example, 19.7x on 2019-12-28), and multiple interim readings above 50x—100x occurred through 2021–2023.
Since the 129.4x reading in March 2024, the P/E has contracted steadily to 35.6x by 2024-12-28 and then moved lower through 2025 (20.0x on 2025-03-29; 19.4x on 2025-06-28), settling in the mid-teens in the most recent two quarters (16.7x on 2025-09-27 and 16.8x on 2025-12-27).
The most recent Price-to-Earnings ratio for Walt Disney Co was 16.8x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.