Measuring Disney’s Valuation against Peers



Disney’s valuation metrics

In this final part of our series on the Walt Disney Company (DIS), we’ll compare the company’s valuation metrics with those of its peers. Disney has a high forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 9.9x. Twenty-First Century Fox (FOXA), Time Warner (TWX), and Comcast (CMCSA) have forward EV-to-EBITDA multiples of 8.7x, 10.5x, and 8.4x, respectively.

Disney is trading at a high PE multiple of 15.9x. Remember, price multiples indicate the value of a company from an investor’s point of view, EV (enterprise value) multiples value a company from the perspective of shareholders.

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Disney’s value proposition

Although some investors are worried about the fate of ESPN, given recent subscriber losses, Disney seems poised to navigate the changing landscape of the media industry in the US (SPY). The company is set to launch a direct-to-consumer service for ESPN later this year, but it has also licensed its ESPN network to online television services like Hulu.

The company’s other business segments, including Studio Entertainment and Parks & Resorts, are also firing on all cylinders by effectively monetizing intellectual property. And as we discussed in previously in this series, Disney expects its Consumer Products and Interactive business to do well in 2H17.

Notably, Disney makes up 0.7% of the SPDR S&P 500 ETF (SPY). SPY has 4.3% of its total holdings in the computer sector.


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