David Trainer argues Disney stock is overvalued after a 30% run-up, priced for perfection with unrealistic long-term growth assumptions. Robert Luna counters that strong film and parks pipelines, plus upcoming reopenings, justify valuations around $120-125. They debate ESPN, theme-park attendance, and earnings multiples.
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Thank you very much, Dominic. And speaking of movers, Disney shares having a huge run-up in the past year, over 30% in that time period. Has the stock run its course or is there still more room to the upside?
Good old-fashioned stock brawl on Disney today. For a magical brawl, we got Robert Luna from SureVest Wealth Management. He's our bull on this. And David Trainer from New Constructs is our bear. David, it's un-American to be bearish on Disney, I thought.
You know, I realize that it's still a great company. It's just not the best stock right now. I'd never say anything bad about Disney as a business, though.
Simply just too expensive. Is that what you think?
Yeah, that's right. It's priced for perfection. They've got a great pipeline, but it's all priced in. I mean, the valuation implies the company's going to grow profits and revenues at over 6.5% for 40 years. So I'd say that's probably a pretty good run. And we live in a world where there's a lot more competition for Disney, and they can only recycle Star Wars and Avengers for so long, right? We haven't seen a Mickey Mouse movie in a while, right? Because some things just get old. And look, I think they've done a great job. The pipeline looks good. And the stock accurately reflects everything.
What do you think, Robert? I mean, it is just looking at the analyst estimates here, $5.50 in earnings. It's trading at $100 and that's for September of next year. It's trading at $108. You know, it's certainly not cheap.
Yeah, I mean, well, if you look at next year's earnings, Kelly, I think the stock easily can hit above $6 a share. And if you look at the historical multiple on the stock, that puts Disney at about 120 to 125. I mean, I get the downgrade to neutral. I mean, they're not They're not saying sell. This is the first time, honestly, in the last 3 years that my 12-month target hasn't exceeded 20%. We're looking at about a 14 to 15% upside over 12 months. But, you know, if you look at the S&P where that's valued, I mean, if you're getting ready to sell Disney here, you might as well be selling the whole market. This is a best-in-breed company. And it's been mentioned they have a very robust pipeline. You know, this year they're putting the 60th anniversary of Disney Parks in California. That's going to drive record attendance. They got Lucas coming up in December. Let's not forget Shanghai is opening January, February of next year. So there's a lot of good things about Disney, and even at the shareholder meeting, they announced a Frozen Part 2. So I don't think it's time to let this one go.
What about that, David? I mean, Bob Iger is celebrating his 10th anniversary as CEO. I mean, we all agree he's done a masterful job of assembling these different parts and pieces that are in that pipeline that you acknowledge is pretty strong right now. Don't you think he's got something else up his sleeve at this point?
You know, I think the point that, look, if you're looking at Disney, And you're thinking of sell there, you might want to think about selling the whole market. I think there's a fair point to that, right? I mean, the idea is that it's fully valued, and most people believe the market's fairly valued. And I think when it comes to picking stocks, hey, if you're going to put your money into something, put in something that's attractively valued, something that's cheap, not something that's fully valued. And I think that's the distinction here. Disney's a great company.
Robert, let me, if I just try to pick at Disney's business for a second, do this. You could argue ESPN.
All right.
We've got a bunch of things happening with the television business changing. Theme parks, every time measles comes up, people people maybe get a little scared off. I mean, there are perhaps some of these concerns that could cloud the stock for a time.
Yeah, I mean, absolutely. Short term, you could see a 5%, 10% pullback. I think that's an opportunity. I was at Disneyland Saturday, Kelly. It was packed. Measles wasn't an issue. And I think time and time again, people have had a bearish case on Disney for the last, you know, 2.5, 3 years at the— every time it gets to these valuations, but they continue to exceed expectations. I would stay with the stock.
All right, gentlemen, thank you both. Appreciate it very much. Robert Luna and David Trainer.
