Disney's Valuation Is at Multiyear Lows, and Buybacks Are at a 9-Year High. Is Disney a No-Brainer Value Stock to Buy Now?

The Walt Disney Company (NYSE: DIS) is a media and entertainment powerhouse. This statement isn't really up for debate. Its various studios, franchises, characters, and storylines are key to its success.

However, the business has made for an awful investment. In the past five years, the share price has declined 41% (as of Aug. 6).

The valuation is now at a multiyear low. Meanwhile, the leadership team is raising repurchase activity. Does this setup make Disney a no-brainer value stock?

Image source: The Motley Fool.

Disney's momentum continues

The company's fiscal 2026 third-quarter (ended June 27) financial results highlight once again that the experiences segment is a strong performer. Revenue here was up 10% year over year, with operating income rising 20%.

Revenue from theme park admissions was boosted by 3% higher attendance and 5% favorable per-capita ticket spending. Resorts and vacations saw a 17% bump in sales, driven by the launch of two new cruise ships in the past year.

Disney's direct-to-consumer streaming operations, most notably from Disney+ and Hulu, have also introduced a notable financial catalyst. Revenue increased 11% year over year. And the operating margin came in at 13%. The company's streaming division was burning more than $1 billion quarterly a few years ago. The transition from a cash-burning machine to a moneymaker has been impressive.

Success at the movie theater also stands out. Toy Story 5 has now eclipsed $1 billion in worldwide box office revenue.

Dialing up the share repurchases

During the third quarter, Disney raked in $3.1 billion in free cash flow (FCF). This was lifted by a 32% jump in operating cash flow. The consensus view among analysts is that FCF will rise in each successive year from fiscal 2025 through fiscal 2028.

Investors should be encouraged by how executives plan to handle this windfall in the near term.

"We believe our shares are undervalued and we continued to lean into share repurchases during the quarter," the earnings press release reads. It's hard to find a clearer example showcasing how the management team feels about its stock price. This directly dictates capital allocation.

Disney now plans to spend at least $9 billion on share repurchases this fiscal year. "The reason we're doing that is largely to utilize the cash that had been set aside previously for the OpenAI deal and now from the expected proceeds from the A+E transaction, which was announced overnight," Chief Financial Officer Hugh Johnston said on the Q3 2026 earnings call.

Disney sold its 50% stake in A+E Global Media to simplify the business. This deal will bring in $1.2 billion in cash.

Nine years ago, in fiscal 2017, Disney bought back $9.4 billion worth of its stock. It has essentially ramped up the activity to that level, a vote of confidence in the company's fundamental position.

The stock has disappointed investors

I believe that Disney is a value stock right now, as does the leadership team. Its shares trade at a price-to-earnings (P/E) ratio of 16.8. This valuation has come down dramatically over the past five years. It represents a 33% discount to the overall S&P 500 index.

However, I wouldn't go so far as to call it a no-brainer opportunity. Disney's current share price is $104.68. Exactly 11 years ago, in August 2015, the stock traded at $108.55. Shares have gone nowhere, yet the underlying business has undergone significant change, with cable networks now mattering less to the financial picture.

Disney expects double-digit adjusted earnings-per-share growth in fiscal 2027, after a 12% rise this fiscal year. And analysts see a 10.6% increase in fiscal 2028.

Despite these healthy forecasted gains, supported by the success of experiences and streaming, it's difficult to believe that the market will break with tradition and assign a sustainably higher valuation multiple to Disney shares. In a best-case scenario, I think the stock can register a 10% to 15% annualized total return.

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