Walt Disney (DIS) Looks Beyond Streaming to Satisfy Shareholders

The Walt Disney Company (DIS) has been struggling to please investors for at least the past five years, and its recent September-quarter results did little to shift that narrative. Shares traded lower post-earnings as Disney not only delivered mixed numbers with a revenue miss, but also disappointed on the streaming front—offering very little to reinvigorate the growth story that has long been the backbone of the bullish thesis.

Management’s attempt to redirect the conversation toward the “broader picture” of an ecosystem that extends far beyond streaming—and to position Disney as an earnings compounder and cash-flow machine—didn’t quite resonate with a market that remains thirsty for meaningful top-line growth. On the one hand, the value of financial discipline is clear and appreciated. On the other hand, it’s still not enough for investors to justify paying higher multiples without a more convincing growth trajectory.

Until that changes, Disney’s discounted valuation continues to reflect this asymmetry: resilient fundamentals on one side, and an unclear growth vector on the other. As long as that dynamic persists, I’ll remain on the sidelines and maintain a Hold rating on DIS.

Mixed Results, but No Real Catalyst

Disney’s fiscal fourth-quarter earnings report left a mixed impression. The Burbank-based company delivered solid bottom-line performance, with EPS of $1.11, about 8.5% above consensus—even though it still represented a 2.6% year-over-year decline. Meanwhile, revenue came in at $22.5 billion, missing expectations by 1.4% but still growing 3% YoY.

However, what truly disappointed investors was the absence of a narrative catalyst, especially as the company once again fell short in the segment that draws the most attention and is arguably Disney’s primary long-term growth engine: streaming.

During the quarter, Disney reported weak streaming subscriber growth with no signs of acceleration, even as the period is typically one of the two strongest quarters of the year due to major content releases and back-to-school and late-summer stay-at-home consumption. Disney+ subs reached 131.6 million, up just 3% QoQ, while total streaming subs, including Hulu, reached 195.7 million (excluding ESPN). Disney+ ARPU also remained relatively modest at $8.04, rising only 2% sequentially. In other words, the segment that was supposed to anchor Disney’s growth story once again failed to deliver on both volume and monetization.

If this was the first structural issue in the print, the second was that the broader Entertainment segment continued to deteriorate. Year over year, total Entertainment revenue fell 6% to $10.2 billion, while operating income dropped from $1.06 billion in FY4 2024 to $691 million in FY4 2025—a steep 35% decline. In aggregate, while streaming is improving, albeit slowly, it still hasn’t been enough to compensate for the sharp decline in the company’s traditional businesses.

Trying to Reroute the Narrative Without Fixing the Story

Still on the streaming front, another negative point in Disney’s thesis was management’s announcement that Q4 would be the last quarter with disclosed subscriber numbers—a move similar to Netflix’s (NFLX) decision a few quarters ago—justified by the argument that subs have become “less meaningful” for evaluating performance.

The issue is that Disney now appears to be leaving analysts somewhat “in the dark,” especially because, unlike Netflix, it did not replace subscriber counts with clear engagement metrics. This comes at a time when Disney’s streaming revenue is growing at roughly half the pace of Netflix, making the lack of visibility even more problematic.

In practice, it seems the management team recognizes that the market is hyper-focused on streaming—and that comparisons with Netflix are unavoidable—and that it’s simply impossible to build a narrative of acceleration when subscriber growth is minimal and ARPU is increasing only marginally. The decision to stop reporting these figures feels less like a strategic shift and more like an attempt to change the subject.

According to CFO Hugh Johnston’s statements, the market should view Disney as an earnings compounder and cash flow machine, with the narrative expanding further into Parks & Experiences, cruises, and content licensing.

The argument is backed by $10 billion in free cash flow generated in FY 2025 (up 18% YoY), a three-year EPS CAGR of 19%, continued guidance for double-digit EPS growth in 2026, a target of $7 billion in buybacks for Fiscal 2026 (double the amount in Fiscal 2025), and a cash dividend 50% higher than the $1 per share paid in FY 2025.

A Bull Case That Needs More Than Buybacks

Quite frankly, it doesn’t look bad at all when a company of Disney’s stature doubles down on buybacks and raises its dividend, sending a very clear signal of confidence in future cash flows. For most companies, that alone would be enough to reset sentiment.

But even though this shift toward the “bigger picture plus cash flow” narrative isn’t inherently wrong, it only really works when there’s a visible growth engine underneath it. And right now, that engine would have to be streaming—the part of the business where Disney still hasn’t shown convincing acceleration.

Zooming out, what truly weighs on Disney’s bull case is how it stacks up against peers. Markets are enjoying an unusually strong backdrop for media companies, with several tailwinds, and Disney arguably has one of the most powerful ecosystems in the industry, anchored by world-class IP. Yet the stock remains far below levels from years ago, while leading streaming players like Netflix continue to soar. Given Disney’s assets, the company should perform better in the current market environment.

With a growth story that still feels shaky—and not fully justified by the company’s earnings-compounder profile—it’s not surprising that DIS trades at just ~16x forward earnings, a 54% discount to its five-year median. Meanwhile, investors are willing to pay 46x earnings for a company like Netflix, which offers a far clearer growth trajectory, stronger operating leverage, and a more convincing long-term streaming flywheel.

Is DIS a Buy, Hold, or Sell?

Wall Street consensus on Disney is generally bullish. Of the 18 analyst ratings issued over the past three months, 15 are Buys and only three are Holds. The average stock price target is $138, which implies almost 30% upside over the coming year.

See more DIS analyst ratings

Holding Until the Growth Story is Clarified

It’s very difficult to argue against an earnings compounder, especially one as significant and iconic as Disney, led by a management team that is clearly signaling confidence in the company’s future cash flows. However, this is not the narrative the market wants from Disney right now. And it makes sense. A company undergoing a structural transformation needs more than cash strength and financial discipline—it needs a growth engine that is visible, scalable, and convincing. In Disney’s case, that engine inevitably runs through streaming.

In the long term, owning Disney can still make sense, especially with valuations now de-risked. But in the short to medium term, given the issues outlined above, I remain skeptical. For now, I continue to rate the stock as a Hold.