Is Walt Disney Stock a Buy, Sell, or Hold 47% Below Its All-Time High?

In the five years leading up to their peak in March 2021, Walt Disney (NYSE: DIS) shares were up 106%. The media and entertainment giant was clearly a winning opportunity for the investment community. It helped that the overall market was experiencing a post-COVID surge.

It hasn't been a fun story in the last five and a half years. The consumer discretionary stock currently trades 47% below its all-time high (as of Sept. 17). For such a storied business that has a strong presence in its markets, this has been a worrying trend.

Is Disney a buy, sell, or hold right now?

Image source: The Motley Fool.

Dealing with the decline of linear TV

One of the reasons that the stock performed so poorly in recent years might be because of the changing media landscape. Thanks to the pioneering success of Alphabet's YouTube and Netflix, streaming video entertainment has now become prevalent. This transition has had a negative impact on Disney's legacy operations.

Known for its ABC and ESPN channels, Disney dominates the cable-TV industry. But with cable subscribers declining every year after reaching a peak of more than 100 million households in the U.S. around 2010, this segment has been a headwind to Disney's financials, even though it remains firmly profitable.

It's impossible to know how long the industry's fall will go on. Additionally, no one has any clue if things will eventually stabilize. Nonetheless, this trend is something that shareholders have to accept.

Disney's bull case

Disney was certainly late to the streaming party. But it's better to be late than to never show up.

In November 2019, it launched the flagship platform Disney+. With Hulu (excluding live TV), the company is now a juggernaut in the streaming industry. As of Sept. 27, 2025, these two services, which make up Disney's entertainment direct-to-consumer operations, had a combined 191 million subscribers. This makes it one of the few truly scaled platforms in this market.

Even better, this segment is posting surging profits. Operating income was up more than 100% year over year in the latest fiscal quarter (Q3 2026 ended June 27), while revenue increased by 11%.

The experiences division, on the other hand, remains the crown jewel of the Disney empire. Theme parks, cruises, and consumer products accounted for 39% of total revenue and 54% of company operating income.

There is a meaningful opportunity here for growth. "For every one guest who visits a Disney Park, there are more than ten people with Disney affinity who do not visit the Parks," a September 2023 press release reads, which outlined the business's capital investment plan.

And it's difficult not to appreciate Disney's wide economic moat. It has unparalleled intellectual property that rivals simply can't replicate. Characters, stories, and franchises from Marvel, Pixar, and Lucasfilm, for example, support the company's ability to resonate with fans around the world.

Double-digit returns are a possibility

Disney isn't a rapidly growing business. It's a mature company that has established competitive positions in the markets that it serves. Consequently, investors shouldn't expect outsized financial gains over the long run.

But I still think the stock can rise at a double-digit annualized pace in the coming years. According to sell-side analysts, Disney's earnings per share are forecast to increase at a compound annual rate of 11.8% between fiscal 2025 and fiscal 2028. Given the success of experiences and streaming, it's reasonable to assume a similar pace of growth, albeit slightly lower, in the subsequent years.

As of this writing, shares trade at a forward price-to-earnings ratio of 14.5. This makes Disney a value stock, in my view. This represents a 28% discount to the S&P 500 index. I believe that if this business continues to report solid revenue and profit gains, then the valuation gap with the overall market should close. The starting valuation introduces more upside.

With shares almost being cut since early 2021, now is the time for investors to buy Disney.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.