DIS

We rate Walt Disney Co (DIS) as a Hold with a composite score of 53.2/100 at a current price of $105.98. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (77th percentile) and momentum (64th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (38th percentile) and quality (42th percentile) tempers our overall conviction. We assign a Narrow Moat rating (42/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Walt Disney Co holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 53.2/100 places it at rank #1506 in our full 7,333-stock universe. As a mega-cap company with a $202.7B market capitalization, Walt Disney Co benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

The outlook is moderately positive, with revenue expanding at 12% and favorable momentum (64th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 36% (-23.7pp vs sector) narrow to operating margins of 19% (+15.6pp vs sector) and net margins of 14.9%, yielding a gross-to-net conversion rate of 42%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $105.98, Walt Disney Co is trading near fair value based on current fundamentals. Our value factor score of 61/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 12.9x (a 46% discount to the sector median of 23.7x), EV/EBITDA of 10.0x (near the sector median), P/B of 1.6x, P/S of 1.9x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to Walt Disney Co. The stock presents a balanced risk profile: risk factors are within normal ranges. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

We identify no major risk factors at this time. The company's stability factor sits at the 77th percentile with quality at the 42th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: above-average stability (77th percentile) suggests predictable business dynamics; large-cap scale ($202.7B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Walt Disney Co's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 12.7%, and the balance sheet is managed within acceptable parameters (D/E: 77%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Walt Disney Co falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.10% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Walt Disney Co receives a Hold rating with a composite score of 53.2/100 (rank #1506 of 7,333). Our quantitative framework assigns a Narrow Moat (42/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 57/100.

Our analysis supports a neutral stance on Walt Disney Co. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.