Is This Leading Blue-Chip Company the Top Bargain Stock to Consider for 2026?

Disney Stock Performance and Investment Potential

Over the past year, Walt Disney (DIS) shares have largely moved sideways, underperforming the broader market. This stagnation can be attributed in part to inconsistent financial results—while Disney has exceeded earnings per share expectations in the last two quarters, it has fallen short of revenue forecasts.

Despite this lackluster movement, current valuations and Disney’s positive projections for fiscal years 2026 and 2027 suggest that now could be a favorable time for investors to consider entering the stock.

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Recently, Peter Supino of Wolfe Research rated Disney stock as “Outperform” with a price target of $133. He argues that Disney is undervalued at 16 times projected 2026 earnings, especially when compared to S&P 500 and Netflix valuations. Supino also points to Disney’s strong intellectual property portfolio as a reason for higher potential valuations.

Overview of Disney’s Business

Disney is a global entertainment powerhouse, operating across the Americas, Europe, and Asia Pacific. The company’s operations are divided into three main areas: Entertainment, Sports, and Experiences.

In fiscal year 2025, Disney’s revenue increased by 3% year-over-year, reaching $94.4 billion. While the Sports division’s revenue remained steady, the Entertainment and Experiences segments grew by 3% and 6%, respectively.

Although Disney maintains a positive outlook for 2026 and beyond, its stock price has declined by 7% over the last six months. This pullback could present a buying opportunity ahead of anticipated improvements in the company’s fundamentals and growth trajectory.

Highlights from Fiscal Year 2025

Beyond headline figures, Disney’s 2025 results reveal several encouraging trends. In the fourth quarter, the company reported 131.6 million paid subscribers, a 3% increase from the previous quarter. This subscriber growth is expected to continue, supported by Disney’s extensive content library.

The Experiences segment posted a 6% rise in revenue. With two additional cruise ships set to launch soon and ongoing expansion at all theme parks, Disney is well-positioned for further growth in this area.

Financial Strength and Balance Sheet

As of the end of fiscal 2025, Disney held $5.7 billion in cash, providing a strong financial cushion for future investments. The company’s total debt stood at $42 billion, down $3.8 billion year-over-year. With healthy cash flow projections, Disney is expected to continue reducing its debt load.

Optimistic Projections for 2026 and 2027

Disney anticipates robust growth over the next two fiscal years. The company is forecasting double-digit earnings per share growth in 2026 compared to the previous year.

Operating cash flow is projected to reach $19 billion, with $9 billion allocated for capital expenditures. This should result in a strong free cash flow of $10 billion, enabling both share buybacks and dividend payments.

For 2027, Disney expects another year of double-digit EPS growth, which could translate into even stronger cash flows and increased dividends for shareholders.

Analyst Opinions on Disney Stock

Among 29 analysts, Disney is widely regarded as a “Strong Buy.” Specifically, 20 analysts rate it as a “Strong Buy,” three as a “Moderate Buy,” five as a “Hold,” and one as a “Strong Sell.”

The average price target among analysts is $135.28, suggesting a potential upside of 17%. The most optimistic target is $160, which would represent a 39% gain from current levels.

Analysts’ bullish outlook is supported by Disney’s valuation at 16 times expected 2026 earnings and an appealing dividend yield of 1.32%. With projected earnings growth, there is potential for even higher dividends in the future.