Is Disney Stock a Good Buy Right Now?

Disney Sign

Disney is one of the most popular and well-known brands in the world. Few other companies give customers so much of what they want, which is fun, family entertainment.

From iconic characters like Mickey Mouse to beloved theme parks and film and television productions, Disney’s reach encompasses the entire globe. But, how much is Walt Disney stock worth right now, in the middle of the coronavirus pandemic, and will it be a good buy going forward?

How Did Disney Stock Do Before the Pandemic?

Disney stock was a big winner for those holding it since 2010. By 2015, the stock had more than quadrupled in price, before trading sideways from 2015 to 2019.

In 2019, before the coronavirus pandemic struck, Disney stock had begun another big run, gaining over 30%.

Here’s a look at Disney stock prices between August 2015 and August 2020:

disney stock prices

How Did the Pandemic Affect Disney Stock?

Employees bore much of the initial brunt of the crisis. In April 2020, Disney announced that it was suspending pay to 100,000 workers, or roughly half of the company’s global workforce.

The company shuttered its theme parks on March 14, and its cruise line and entertainment divisions suffered similar lockdowns. In its second fiscal quarter, Disney reported an astonishing 93% drop in revenue.

Disney’s stock took a precipitous tumble in 2020. After hitting its all-time high of $151.64 on Nov. 26, 2019, Disney stock fell as low as $79.07 per share in March of 2020.

Is Disney Stock Still a Good Buy?

Just because Disney is a well-known, popular company doesn’t necessarily mean its stock is a good investment.

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Many factors go into evaluating whether a stock is a good purchase, including:

  • Market capitalization, or the total value of a company’s outstanding shares
  • Price-earnings ratio, calculated by dividing a company’s share price by its annual earnings
  • Future earnings prospects, or how much money a company is expected to make going forward
  • Company news, such as new products or events that might be a catalyst for the stock

Keep in Mind

One drawback for income investors would be the suspension of the Disney stock dividend announced on May 5.

In retrospect, Disney would have been a great buy in March, when it traded at its 52-week low. Since then, the stock has risen dramatically along with the broader market, and it sits at $127.77 as of Aug. 19.

Still, that price is about 20% below Disney’s all-time high, so if you’re a believer that Disney can achieve its former glory, it may still be a good time to buy.

Is Disney a Good Long-Term Stock?

Evaluating stocks over the long term can often be easier than picking stocks for the short term. Most stocks can be quite volatile over a short period, and even the best stocks can suffer horrendous sell-offs — including Disney, as evidenced by its nearly 50% drop during the peak coronavirus panic.

But looking long term, it’s easy to make the case for owning Disney. Here are some of the company’s strengths:

Disney’s Strengths

  • Iconic characters like Mickey Mouse
  • Classic film library
  • Family-friendly cruise ships
  • Legendary theme parks
  • Media properties like ESPN, ABC and National Geographic
  • Studio properties, including 20th Century Studios, Marvel, Pixar and Lucasfilm

Since Disney owns some of the most well-known and beloved entertainment and media properties in the world, it may be a good long-term investment.

As customers return to the company, the stock may even resume paying its dividend, which could provide another boost to the share price.

How To Buy Disney Stock

Buying Disney stock involves the same steps as buying any company’s shares. Here’s a closer look:

1. Evaluate Disney’s Stock Performance

Before you learn how to buy Disney, you’ll have to make sure you want to buy it in the first place. Here are some metrics to know before you buy:

  • Stock symbol: DIS
  • Current price (as of Aug. 20): $128.10
  • 52-week high: $153.41
  • 52-week low: $79.07
  • Dividend: Currently suspended

2. Determine How Many Shares You Want To Buy

Now that you know, you can calculate how many shares you want to buy. Divide the amount of money you’ve set aside for your Disney investment by the current Disney stock price to determine how many shares you can buy.

For example, if you have $1,281 available to invest in Disney, you could buy 10 shares at the Aug. 20 closing price of $128.10.

3. Decide Where To Buy Disney Stock

If you’re a long-term investor, you might consider buying Disney shares directly from the company. Under the Walt Disney Company Investment Plan, you can authorize regular deductions of at least $50 monthly from a bank account for the purchase of shares. Cash dividends are automatically reinvested in additional shares.

If you’d rather be more flexible with your investments, you can buy shares of Disney from any online broker. Many online brokers these days offer zero commissions on stock trades, and some offer fractional share purchases.

This means that if you only have $64.05 to invest, for example, you could buy one half-share of Disney stock at Aug. 20 prices.

4. Choose Your Order Type and Place Your Order

If you’re buying Disney stock from a broker, you’ll have to enter an order type.

The most common type of order is a market order, which is an instruction for a broker to execute a trade at the next available price.

A limit order is another type of common order. A limit order designates a price at which you want a trade executed. If the stock never drops to your limit price, you’ll never buy the stock, which can only be purchased at your designated price or lower.

Should You Invest In Disney Stock?

Whether or not you should invest in Disney stock is a discussion best reserved for you and your financial advisor. However, here are some of the factors you should incorporate into your decision-making process:

  • How long are you willing to hold the stock?
  • Can you stomach the ups and downs that are inevitable when owning Disney stock?
  • Are you a believer in the long-term success of the company?

Disney stock has proven to be a winner over the long term. The brand name recognition and portfolio of attractive business divisions will likely make it a winner over the next 10 years or longer.

Information is accurate as of Aug. 26, 2020, unless otherwise noted.

 

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.