How Good Has DIS Stock Actually Been?

Disney (NYSE: DIS) bills its original theme park in California as "the happiest place on Earth," but the same can't be said for its shareholders in recent years. Shares of the media stock giant have lagged the market in recent years.

It doesn't have to stay that way.

Let's take a look at how DIS stock has fared over the past one, three, and five years relative to the S&P 500 (SNPINDEX: ^GSPC). Then let's look ahead to see how the next few years might potentially play out better for Disney investors. With a little pixie dust of good fortune, the House of Mouse doesn't have to be broken home forever.

Image source: Disney.

One year

Disney is trading 9% lower over the past year, a stark contrast to the S&P 500 with an 11% rise in that time. Like most investments, Disney shares began to tumble in March and April when tariff tensions began to percolate. Disney isn't selling artificial intelligence (AI) chips to China, but it potentially had more to lose. It operates the world's most popular theme parks, including sizable stakes in gated attractions in Shanghai and Hong Kong. It routinely puts out some of the world's most watched movies. A beefy 55% of its Disney+ subscribers are international.

It's easy to see how Disney would be vulnerable in a climate where the U.S. was alienating other countries for the sake of protectionism. This doesn't mean that some of the downticks weren't self-inflicted. Disney's studio put out a few duds including Elio and the live-action remake of Snow White. A now-resolved dispute with YouTube TV, kept ABC, ESPN, and other Disney-owned networks off the leading live TV streaming service for the first half of this month. Its latest financial update -- the fiscal fourth-quarter results it announced last week -- also disappointed the market.

Three years

This is the only of the three timelines where Disney is trading higher, up 12%. Unfortunately, the S&P 500 has risen 65% over the past three years. The stock soared 23% for all of 2024, almost double its return over the past three years.

A lot went right for Disney last year. It put out the year's three highest grossing films worldwide. It announced major expansion plans for its domestic theme parks and its growing fleet of cruise ships. Revenue rose a mere 3% in fiscal 2024, but segment operating income quadrupled that growth rate.

Five years

If you draw a line five years into the past -- to November 2020 -- you would think that this would be a slam dunk for the Mickey Mouse company. Five years ago, Disneyland was still closed and Disney was pushing out major theatrical releases.

However, many consumer-facing stocks including Disney started rallying earlier in 2020. There was also bullish momentum of Disney as a "shelter in place" play with the successful launch of Disney+ just four months before the pandemic shutdown. It's not pretty. Disney stock is down over the past five years. The S&P 500 is up 79%.

Into the future

There have been some dark stretches in recent years, but Disney is well positioned to continue being a bellwether for entertainment stocks. Persevering through the lulls rewards investors over time if the catalysts are coming, and that's the case here.

Disney will have this year's top multiplex draw premiering next month. Its pipeline of theme park attractions, new cruise ships, and theatrical releases make this an opportunistic time to buy Disney. It's trading for less than 16 times this fiscal year's earnings and less than 14 times next fiscal year's target. It looked like it was going to be a small, small world for Disney in the springtime of this year, but now it's going to be a great, big, beautiful tomorrow.

Rick Munarriz has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool has a disclosure policy.