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Disney stock analysis. Ticker: $DIS

Disney stock is up 24% this year. But shares have been a bumpy ride and are still below the level they reached back in August 2015.

At the current price, the company has a market cap of 204 billion dollars. It’s got 10 billion of cash and investments on its balance sheet and 48 billion of debt so the enterprise value is 242 billion. Revenue over the last 12 months is 89 billion, with 3 billion of net income and 8 billion of free cash flow. So Disney stock is valued at 68 times earnings or 30 times free cash flow.

However, Disney’s valuation is not as bad as those multiples suggest. The company is still reporting heavy losses from its streaming business in the region of $2.5 billion dollars. So when Disney starts making profits from streaming, its earnings will jump and its valuation will appear much more attractive.

There’s a catch, however. Because as people tune in to Disney streaming they tune out of Disney’s TV channels known as linear networks. Last year, Disney’s linear networks saw a 9% drop in revenue and a 21% drop in operating income to 4.1 billion. Meanwhile, Disney’s streaming business grew to 20 billion with an operating loss of 2.5 billion.

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