Sign InDisney's Stock: Mixed Indicators and New Competition Impact Investor Appeal
Summary
As of August 10, 2023, Disney's stock may see short-term bullish movement but uncertainties surrounding competition and operational challenges suggest a Hold rating, while the stock price could approach the resistance level of $91.99 for the next trading day.
Fundamental Analysis
The Walt Disney Company, with a ticker of DIS, is a prominent player on the NYSE. With an astonishing market cap of $162.67 billion and around 1.83 billion shares outstanding, the influence of the Disney empire is without question.
The company posted an earnings per share (EPS) of $2.23, and with a last closing price on August 10, 2023, at $91.76, this brings its price to earnings ratio (PE) to 39.92. This PE ratio seems high, implying that investors are anticipating higher growth in the future or that the stock is overvalued. The discounted cash flow (DCF) is valued at $95.38, suggesting the intrinsic value of the stock is above the current price, indicating potential undervaluation.
Although Disney is a significant figure in its field, recent news concerning several issues may impact its appeal to investors. The announcement from NFL about launching its own streaming platform imposes undeniable pressure on Disney's ESPN, which could potentially lose a share of its audience. This, combined with the declined subscription rate for their key ESPN+ service, might affect Disney's revenue in the foreseeable future.
Disney's performance showed a $4.27 (4.88%) improvement, closing at $91.76 on August 10, 2023. The range traded during the day was between $87.75 and $92.53, intersecting the 50-day moving average of $88.94, but remaining below the 200-day moving average of $95.71, suggesting a potential trend reversal if the price continues to rise.
The MACD (3-month) suggests a bearish sentiment, standing at -1.01, slightly indicating short-term selling pressure. On the other hand, an RSI of 63 hints at a short-term bullish phase as it is near the commonly used oversold threshold of 70.
Notably, considering the ATR (average true range) at 2.18, a stop-loss can be put at $87.87, providing a risk-management reference for potential intraday traders. Additionally, the current support and resistance levels stand at $88.64 and $91.99, respectively.
Given the above analysis, Disney's stock may see short-term bullish movement due to the bounce off its $85 support level and the recent Penn Gaming deal as pointed out in recent news. However, the company's long-term outlook seems less certain due to potential competition from the NFL and internal operational challenges.
If Disney's stock continues its current trajectory, the stock price could approach the resistance level of $91.99 for the next trading day on August 11, 2023. For the upcoming week, the stock may oscillate around this level if it does breakthrough, but the potential impact of the recent NFL announcement needs to be watched closely.
Given the mixed indicators and recent news impacting Disney, the stock can be categorized as a Hold. Despite short-term bullish signs, uncertainties in Disney's fundamental outlook, primarily due to increased competition from new entrants like NFL+, and operational challenges, signified by declining ESPN+ subscriptions, compel caution. Moreover, its relatively high PE ratio hints at overvaluation. However, with an intrinsic value (as per DCF) slightly higher than its current price, there seems to be room for potential appreciation, making it a suitable candidate to remain in an investor's portfolio until further clarity on the company's growth and performance. Check full Disney forecast and analysis here.
