In this article I am going to analyze Walt Disney Co, which its ticker (DIS) based in its earning per share (EPS) and its (P/E) ratio to see how much its stock will worth in the 2027.
First, let see how does DIS’s EPS did in the past six year starting form 2017 in order to estimate its growth rate, as shown below:
As we can see from the above chart that DIS EPS has been dropped from almost 1.8$ from 2019 until it reached -0.2 in q3 in 2020 due to COVID-19 Crisis and started from there to move up, Until It reached to 0.99$ in Q4 in 2022. That can lead us to one conclusion that DIS has been hit hard by the COVID-19 Crisis and the company even when it been recovered in gradual steps, our valuation for its stock to year 2027 will not bee that accurate.
Now let us move to the other criterion to evaluate this company which is by using its Sales and (P/S) ratio.
As we can see from the above chart DIS’s sales has been affected by COVID-19 Crisis but recovered than its EPS and goes to higher level compared with time before COVID-19 Crisis. The company sales goes from 15.4B in 2017 until it reached 23.5B in 2022 with growth rate 8.82%.
Now that we have the growth rate of DIS sales in the last five years, we are going to use this growth rate to estimate what will its sales be in 2027 ,which is five years from now by applying the following formula:
- PV = DIS sales in year 2022 = 23.5 Billion.
- i = growth rate of DIS sales estimated above = 8.82%
- n = years of investment = 5 years in 2027
By substitute the numbers estimated early in the above formula, I end up with Walt Disney Co. sales in year 2027 equal to 35.86 Billion$.
Now, I have to see what was (P/S) ratio that DIS did have in the last six years, which as shown below:
Now we can estimate two scenarios for DIS stock price which is Bull market and the bear market.
For Bull market, I am going to take the highest (P/S) ratio which was 5.75 in year 2021, to see what will be the price of DIS stock in 2027:
Bull market DIS Stock’s price in 2027= (5.75)*(35.86) = 206.19$.
For Bear market, I will take the lowest (P/S) ratio which was 1.88 in year 2022, to see what will be the price of DIS stock in 2027.
Bear market DIS Stock’s price in 2027= (1.88)*(35.86) = 67.42$.
As of writing this article, Walt Disney Co. stock price is 102.09 $ which is below the Bull market estimated price and above the Bear market estimated price, however, the current stock price is below the average of two estimated price which is 136.81$. Therefore, I believe Walt Disney’s stock is good opportunity for investment.
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