Investors who have a time horizon spanning at least five years should make it a priority to find companies that possess durable competitive advantages. These traits make up their economic moats. And they’re a sign that you’re dealing with a high-quality business.
One such company has seen its shares fall 53% from their peak (as of July 1). Here’s one reason that investors should buy this wide-moat stock right now while it’s on the dip.
Image source: Getty Images.
As of this writing, Walt Disney (DIS +3.85%) shares trade at a forward price-to-earnings ratio of just 12.9. This is a notable 40% discount to the S&P 500 index. For a business that possesses unrivaled intellectual property from the likes of Walt Disney Pictures, Marvel, Pixar, and Lucasfilm, this is too good an entry point to pass up.
The market seems concerned about Disney’s legacy assets. This is a valid issue. Cable TV continues to decline. And this presents a headwind pressuring financial performance.
Today’s Change
(3.85%) $3.68
Current Price
$99.39
Key Data Points
Market Cap
$173B
Day’s Range
$95.79 – $99.49
52wk Range
$92.19 – $124.61
Volume
391.2K
Avg Vol
9.5M
Gross Margin
31.63%
Dividend Yield
1.51%
However, the company’s overall profits are rising, thanks to the success of the theme parks and cruises. Additionally, Disney’s direct-to-consumer streaming services, highlighted by Disney+ and Hulu, hold strong positions in the industry.
Management expects adjusted earnings per share to grow 12% this fiscal year, with a double-digit gain in fiscal 2027. And analysts believe that this metric will increase 10% in fiscal 2028.
This tailwind can propel the stock to a winning return.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool has a disclosure policy.
