Disney World can be fun.
As a kid, I enjoyed it far more. But I can’t deny that Disney knows how to make sure its customers are happy.
The parks have something for everyone.
Rides for the thrill-seeker, foods for the snack-eater and tons of merch for the Disney super fan.
The only thing that makes me smile after thinking of all the money I spent during a day at the park is a good Dole Whip.
But something spooky lurks beneath all the goodness and joy…
And I am not talking about The Haunted Mansion.
The Walt Disney Company (NYSE: DIS) rates a “High-Risk” 14 out of 100 on our proprietary Stock Power Ratings system.
Let’s take a closer look.
Disney’s Streaming Service Horror Show
Though it’s a company known for adapting to the times, Disney’s venture into the streaming service industry may be hurting it the most.
With the shutdown of theme parks and movie theaters, it had to figure out new ways to make money to stay afloat during the COVID-19 pandemic.
Thus came Disney+, a subscription streaming service with Pixar, Marvel, Star Wars and National Geographic content.
Though the service had rapid growth, its pace is slowing in critical areas of development.
Total subscribers grew to 152.1 million for the latest quarter, a 31.1% increase year over year.
Despite recent Disney+ subscriber numbers coming in above estimates, the pace of new subscribers joining the service is crawling compared to its initial release.
This comes from competition amongst other streaming giants such as Netflix and Amazon. (Click those links for my recent breakdowns.)
There is tough competition in the streaming world — and Disney is struggling to keep up.
Let’s see how the stock ranks in our ratings system.
Disney’s Stock Power Ratings & Disastrous Momentum
Disney’s overall Stock Power Rating is atrocious at a “High-Risk” 14.
One thing to note is its momentum score, but I will get into that in a second.
You can see below that Disney’s factor ratings are all over the place.
DIS’ Stock Power Ratings in October 2022.
It rates in the red on four out of our six factors.
It rates a 0 on size and a 30 on value.
This means the company is massive (its market cap is $192 billion) and way overvalued compared to its peers.
But let’s get back to momentum.
When looking into momentum, our Stock Power Ratings system considers the stock’s historical returns over the past one to 12 months for share price appreciation and dividends.
If we zoom in Disney’s stock performance over the last 52 weeks, you can see that negative momentum in action.
Source: TradingView.
In the last year, DIS stock has lost around 37%.
Disney stock lost almost 50% from its 52-week high in November to its 52-week low in July.
The stock has recovered a bit in October, but it’s still well off its 52-week high.
This all earns Disney an 18 on our momentum factor.
The Bottom Line
Disney scores a “High-Risk” 14 out of 100 on our Stock Power Ratings system.
We expect it to significantly underperform the broader market over the next 12 months.
But this isn’t it for our Stock Power Ratings system.
To get one highly rated stock you should consider investing in, check out Matt Clark’s Stock Power Daily.
Monday through Friday, he gives you one stock to buy or avoid on our system and tells you why — for free!