Scary ‘High Risk’ Momentum: Disney’s Power Drops
Disney World can be fun.
I enjoyed it much more as a child. But I can’t deny that Disney knows how to make customers happy.
Everyone will find something for themselves in the parks.
Rides for thrill seekers, food for snack lovers and tons of merchandise for Disney super fans.
The only thing that makes me smile when I think about all the money I spent in a day at the park is a good Dole Whip.
But something terrible is hidden under all the goodness and joy…
And I’m not talking about The Haunted Mansion.
The Walt Disney Company (NYSE: DIS) rated as “High Risk” 14 out of 100 in our proprietary inventory power rating system.
Let’s take a closer look.
Disney’s Horror Show Streaming Service
While it’s a company known for adapting to the times, Disney’s venture into the streaming industry may be its biggest detriment.
With the closure of theme parks and movie theaters, new ways to make money have had to be found to stay afloat during the COVID-19 pandemic.
Thus came Disney+, a subscription streaming service from Pixar, Marvel, Star Wars and National Geographic content.
Although the service has developed rapidly, its pace is slowing down in critical areas of development.
Total subscribers grew to 152.1 million last quarter, up 31.1% year over year.
While Disney+’s recent subscriber numbers are beating estimates, the rate of new subscribers joining the service is picking up compared to its initial release.
This is due to competition from other streaming giants such as Netflix and Amazon. (Click on these links to see my recent breakdowns.)
The world of streaming is fiercely competitive, and Disney is struggling to keep up.
Let’s see where the stock ranks in our rating system.
Disney Stock Power Ratings and Catastrophic Momentum
Disney’s overall strength rating is terrible at ‘high risk’ 14.
One thing worth noting is his momentum, but I’ll get to that in a second.
Below you can see that the Disney factor ratings are all over the place.
It rates in the red on four of our six factors.
This estimates a 0 on size and a 30 by value.
That means the company is huge (it has a market cap of $192 billion) and is vastly overvalued relative to its peers.
But back to momentum.
When looking at momentum, our Stock Power Ratings system takes into account a stock’s historical return over the past one to 12 months to drive stock value and dividends.
If we zoom in on the performance of Disney stock over the past 52 weeks, you’ll see this negative momentum in action.
DIS shares have lost about 37% over the past year.
Disney shares lost nearly 50% from a 52-week high in November to a 52-week low in July.
The stock recovered slightly in October, but is still far from its 52-week high.
Disney makes all of it 18 on our momentum factor.
Disney Rated High Risk 14 out of 100 in our stock power rating system.
We expect it to underperform the broader market significantly over the next 12 months.
But that’s not what our stock power rating system is all about.
For one highly rated stock you should consider investing in, check out Clark’s goal Stock Power Daily.
Monday through Friday, he gives you one stock to buy or avoid in our system and tells you why — for free!