8. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders as of Q4: 108
Adage Capital Management’s Equity Stake: $205.23 Million
Upside Potential as of May 2: 37.94%
The Walt Disney Company (NYSE:DIS) is a global leader in mass media and entertainment. In the first fiscal quarter of 2025, ending December 28, 2024, Disney reported strong financial performance, reflecting its strategic focus on profitability and growth. Revenue rose by 5% year-over-year to $24.7 billion, up from $23.5 billion in the same quarter of fiscal 2024. Income before income taxes climbed 27% to $3.7 billion, while diluted earnings per share increased 35% to $1.40. Additionally, total segment operating income grew by 31% to $5.1 billion, and adjusted earnings per share saw a significant 44% jump to $1.76. These figures underscore the company’s ability to adapt and thrive amid shifting industry dynamics.
Despite this growth, The Walt Disney Company (NYSE:DIS)’s stock remains undervalued compared to historical benchmarks. Currently trading below its levels from one, three, and five years ago, Disney’s share price does not fully reflect the underlying progress of the business. Since fiscal 2019, the company has increased its revenue by 31% and improved operating profits. A major contributor to this upward trajectory is the transformation of Disney’s streaming operations, which became profitable a year ago after a period of sustained investment and losses. While its linear TV networks continue to experience subscriber decline due to cord-cutting, they still generate significant cash flow. Disney has leveraged this capital to invest heavily in its theme parks and content development, reinforcing its long-term strategy.
In the competitive landscape of theme parks, The Walt Disney Company (NYSE:DIS) has continued to hold its dominant position despite heightened rivalry from Comcast’s Universal brand. Historically, even significant expansions at Universal parks did not stifle Disney World’s attendance or revenue. Instead, Disney has responded with high-impact attractions like Avatar Flight of Passage, Star Wars: Rise of the Resistance, and Guardians of the Galaxy: Cosmic Rewind, which have revitalized visitor interest and attendance. Rather than cannibalizing each other’s market share, major developments by competitors often increase overall tourism in the Orlando area, benefiting Disney as well. With a solid financial foundation and a legacy of innovation, the company continues to reinforce its leadership in both media and themed entertainment.
ClearBridge Value Strategy stated the following regarding The Walt Disney Company (NYSE:DIS) in its Q1 2025 investor letter:
“While we had already begun to shift toward a more defensive positioning entering the quarter, we made a number of adjustments in response to the rapid-fire developments in both economic and political policy. Among our largest new positions during the period was The Walt Disney Company (NYSE:DIS), as we believe that it has turned a corner on building out its streaming service, which should help margins inflect higher and help drive better earnings than the market currently anticipates. The shift in management’s strategy, from “market share growth at all costs” to a more focused approach on improving pricing should also help to improve both profitability and margins, and we believe that there remains meaningful upside compared to other streaming service providers at similar scale.”
