Disney Stock (NYSE:DIS) Is a Buy With 49% Upside as Streaming and Parks Dominate

Disney’s Streaming Engine Accelerates On Price Gains And Arpu Expansion

Walt Disney Co. (NYSE:DIS) is aggressively reshaping its Direct-to-Consumer (DTC) segment with visible gains in subscribers, revenue per user, and operating margins. In fiscal Q1 2025, Disney reported DTC revenues of $6.11 billion, up +8.3% YoY, with adjusted operating margins rising to 5.4%, a sharp improvement from -20.5% in FY2022.

Disney+ ARPU rose to $7.77 (+6.7% YoY), while Hulu reported a robust $99.94 ARPU, backed by 54.7 million subscribers. Disney+ added 1.4M net subs QoQ, reaching 126 million total. This solidifies the stickiness of the platform even amid price hikes and macro pressures. Ad-tier monetization continues to scale. Disney's DTC model is building operating leverage with revenue compounding and higher advertising yield.

Parks, Experiences, And Cruises Drive Massive Profit Surge

Disney’s Experiences division continues to outperform, recording $8.88 billion in revenue, up +5.8% YoY, and a segment operating margin of 28%, a surge from 3.5% in FY2023. As global travel demand rebounds, Disney parks and cruise lines have seen record attendance and per capita spending. The company is also launching a massive growth initiative: a new theme park in Abu Dhabi, tapping into a potential base of 500 million affluent customers within a four-hour flight radius.

This global expansion reinforces the segment’s role as a reliable cash generator. Disney is adding two cruise ships in 2025, estimated to generate $1B to $1.5B annually. With travel players like RCL and CCL still reporting record bookings, Disney's position remains dominant.

Hulu Acquisition At $439M Unlocks Hidden Balance Sheet Leverage

In one of the most underappreciated moves of the year, Disney secured full control of Hulu for just $439 million, far below early valuations of $15B. This deal removes joint venture friction, gives Disney control over a strategic streaming asset with massive ARPU upside, and preserves capital. It also allows seamless bundling of Hulu and Disney+ into ad-supported tiers to deepen monetization.

The impact on the balance sheet is negligible. Net debt stands at -$37.03 billion, improving from the -$40.71B peak in FY2020. This transaction unlocks full integration benefits for Hulu without burdening financial flexibility.

Valuation Remains Discounted Compared To Peers

Despite recent gains, NYSE:DIS trades at forward EV/EBITDA of 13.2x and forward P/E of 21.2x, well below peers like NFLX (P/E 51.59x) and ROKU (EV/EBITDA 31.58x). Disney’s PEG ratio of 1.71x offers a superior margin of safety compared to NFLX (2.32x) and aligns with GOOGL (1.26x).

Legacy competitors such as PARA (7.91x EV/EBITDA) and WBD (7.23x) cannot match Disney’s integrated media ecosystem or profitability path. At current levels, DIS is still below its 10Y average P/E of 32.36x, indicating long-term upside.

Record-Breaking EPS Guidance Backs Accelerating Earnings Trajectory

Management upgraded FY2025 adjusted EPS to $5.75, up +15.6% YoY, from the previous "high-single-digit" guidance. This builds upon FY2024 EPS growth of +32.1%, signaling momentum in both DTC and Experiences segments.

Street consensus now projects EPS to rise to $7.03 by FY2027, up from $6.85, representing a CAGR of +12.3%, outpacing Disney’s historical 5-year EPS decline of -2.9%. This re-rating confirms that restructuring and cost control are finally delivering returns.

Abu Dhabi Park: A Multi-Billion-Dollar Catalyst

Disney’s newest growth lever is a flagship theme park in Abu Dhabi, operated in partnership with Moral Group. This model, similar to Tokyo Disney, enables asset-light international expansion. With 120 million passengers/year flying into the UAE and a catchment base of over 500 million, this park unlocks scalable new revenue.

Given the historical ROI of international parks, the Abu Dhabi project could contribute $2–4 billion annually by 2030. This will reinforce the Experiences division as a margin-rich growth driver for the next decade.

ESPN Spinout And Linear Stabilization Add Future Option Value

Disney’s ESPN strategy includes potential streaming spinouts and premium subscription bundles (priced at $29.99/month), which could significantly raise ARPU while preserving rights exclusivity. Though linear networks remain in slow decline, their cash flow remains positive and now face less cannibalization risk thanks to disciplined DTC growth.

Optionality in this segment still adds strategic value to Disney's overall equity case.

Technical Breakout Validates The Re-Rating In NYSE:DIS

DIS stock broke above its multi-year resistance in the $120s, clearing the 50/100/200-day moving averages. From the April 2025 bottom of $81, the stock has rallied +49.7%, driven by earnings surprises, tariff de-escalation, and strong travel demand.

A retracement to $104 (200DMA) could offer an attractive entry with better risk/reward. Monitor the real-time chart here: DIS Real-Time Stock Chart.

NYSE:DIS Is A Buy With 20–49% Upside Potential

At the current P/E of 21.2x and projected FY2025 EPS of $5.75, NYSE:DIS is fairly valued at $121.90. However, using the FY2027 EPS forecast of $7.03 and assigning a modest re-rating to a P/E of 21.2–25x, we arrive at a long-term price target between $149–$175, implying +21% to +49% upside from current levels.

This valuation does not even fully price in the potential success of the Abu Dhabi theme park or ESPN monetization. With strong execution, earnings momentum, better DTC margins, international expansion, and the cheapest Hulu deal in media history, Disney now trades at a powerful inflection point.

NYSE:DIS is a Buy. The company has turned the page on its toughest decade and is poised to outperform over the next five years. The upside is clear, the margins are improving, and the growth is real. Patience here will likely be rewarded with significant capital appreciation and return to all-time highs.

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