This post was rejected by Seeking Alpha Editors so am sharing it here instead.

Summary

  • Disney’s strong brand can be trusted in uncertain macro-economic times

  • COVID and Iger’s leave of absence was a transient hurdle Disney has hopped over

  • Disney Plus keeps growing, and Disney Parks are returning

  • Bob Iger is coming back to a strong & supportive team

  • Disney shares are at a long-term low with relatively solid financials

Bob Iger: Big Hero 6

Bob Iger, arguably the businessman of the century, is coming back. In his book, The Ride of a Lifetime, he writes about his acquisitions of Pixar, Marvel Entertainment and Lucasfilm that turned Disney into the Behemoth it is today. After a short stint with retirement, he got bored and is back to make some new deals.

Not only is he a CEO with a good track record back, but when the CFO will do anything to get their boss back, it speaks volumes:

Ms. McCarthy, the Disney CFO, was fed up with Mr. Chapek’s performance and leadership, and she turned to the one person she believed could dislodge him. She and Mr. Iger had worked together for more than 15 years and had stayed in touch, including meeting for lunch last summer at the annual gathering of media executives in Sun Valley, Idaho

A Big Hero with a big team is unstoppable.

COVID: A Wrinkle in Time

A lot has been written on this, and I believe calling COVID a black swan event is fair game. As shown in the charts below, financials were stable for years until COVID came about, and things are now re-stabilizing.

It was a Wrinkle in Space-Time that is finding its ground again.

Disney Parks: The Lost Empire

Like castles in most Disney films, Disney’s parks stand firm and wear off the enemies. With COVID at the tip of our tails, people are coming back to parks in full swing, and it’s one of the few things that at-home streaming will never replace.

Much like Atlantis, you have to be there to experience it.

Disney Plus: Breaks the Internet

Subscriber growth has slowed, and it’s no secret that constant growth is unsustainable, but the subscriber base is loyal and committed. Disney Plus compensated for the loss in revenue from closed parks, and in a few years, we’ll have both.

https://www.statista.com/statistics/1095372/disney-plus-number-of-subscribers-us/Even Ralph found balance at the end before breaking the internet.

Brand: National Treasure

Disney’s brand is timeless and unparalleled. Whether you’re a Nicolas Cage fan or not, there’s no debate that it’s a National Treasure.

Financials: Onward

Disney has been a stable and solid business for decades. COVID was a wrinkle in time, Iger leaving was a curveball (or a boomerang if you will), with Disney plus helping raise the tide to keep the boat afloat.

The bad - valuations are historically high, and returns are historically low:

A P/E of ~50 compared to a mean of ~20

  • ROE near ~2% compared to a mean of ~20%

  • Expenses are steadily rising

The neutral:

  • Enterprise value and stock price are approximately the same as they were relative to 2018

The good - things are recovering and not everything is that bad:

  • A P/B of ~1.7 relative to a mean of ~3.8

  • Revenue is steadily growing, even though COVID, and a dropping share price

  • Shareholder equity is steadily growing

This is not meant to be an in-depth quantitative analysis, but just to show that the top line keeps growing, the foundation is strong, and the market may have simply over reacted over the last couple of years.

https://www.morningstar.ca/ca/report/stocks/valuation.aspx?t=0P000005UJhttps://www.morningstar.ca/ca/report/stocks/quote.aspx?t=0P000005UJhttps://www.morningstar.ca/ca/report/stocks/financials.aspx?t=0P000005UJhttps://www.macrotrends.net/stocks/charts/DIS/disney/income-statementhttps://www.macrotrends.net/stocks/charts/DIS/disney/balance-sheet

I’ll leave you with the following quote from the WSJ: