Opinions Jim Cramer - Mad Money
Walt Disney Co.DISBUY ON WEAKNESSDec 27, 2023
Stock price when the opinion was issued
As of Jun 04, 2026. Market Open.
You might be interested:
It's a good company, doing the right things. People still want to go their theme parks and cruise ships. Their streamer is doing a good job, taking the baton from linear TV. The stock looks like 2021 during the pandemic. Revenues and EPS are growing above 10% in each of the next two years, is trading at 14x PE and a dividend growing like crazy. But not it's uncomfortable to hold this stock, but you will be rewarded if you are patient.
He bought more on this AI sell-off. How will AI disrupt/replace their theme parks? With this sell-off, you can buy great companies at great prices which seldom happens.
Jim LebenthalYou have to appreciate its brand power. Does something that no one else in the world can or does, and they do it very well. Lots of avid fans.
That said, not sure its valuation is merited. Cost of running theme parks is very high, and probably getting higher. In an economic slowdown, people may not pay those prices. Media assets are in constant competition. He's a value investor. Wait for a pullback.
It's been consolidating and has to outperform earnings to break out which he expects, given strong theme parts and streaming. It's neither cheap or pricey at 20x PE.
Jim LebenthalStreaming turned profitable by end of 2024, finally, after a reorganization, and is now a major growth driver. Theme parks have been the largest profit generator and they keep coming out with new parks; people are paying high amounts to enjoy them. He expects healthy earnings to come. They will announce a deal between their ESPN and the NFL--sports drives huge profits. Everything is going right, but they need to appoint a successor to Bob Iger.
Lorne SteinbergMixed feelings. On the positive side, doing exceptionally well in streaming with a great library and great branding. Cross-sells better than anyone. Worried about the parks in the short term -- consumer slowdown, expecting global backlash against the US. Hard to bet against its 6-decade growth story for the long term. Balance sheet in fine shape, decent cashflow. Yield is 0.8%.
Even veteran investors can fall in love with a stock. Big mistake. That's what happened with DIS, which he held onto as it lost over half its value since 2021. He refused to sell it, despite buying 21st Century Fox's assets in 2019 for too much, installing a new CEO in 2020 which was a bungler, and who overspent on Disney+. After a dismal quarter in Nov. 2022, CEO Chapek tried spinning it as a positive, and that's when he called for Chapek to resign. Ex-CEO Iger returned and shares bounced for a while, but Disney's problems are too deep to fix overnight. That said, he still believes Disney has a great set of franchises, the balance sheet has been fixed because the company generates a ton of cash and still feels Iger--with smart activist investors--can control costs and fix the company. They will have so much cash that Iger can buy Hulu without straining cash flow. So, he's been buying on weakness. But it was a mistake to believe in this when shares were in the $180s. DIS will come back.