In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)
Weighted Average Cost of Capital (WACC)
FCFF Growth Rate (g)

Walt Disney Co., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Year	Value	FCFF_t or Terminal value (TV_t)	Calculation	Present value at 14.31%
0¹	FCFF₀	10,482
1	FCFF₁	10,700	= 10,482 × (1 + 2.08%)	9,360
2	FCFF₂	11,127	= 10,700 × (1 + 3.99%)	8,516
3	FCFF₃	11,783	= 11,127 × (1 + 5.90%)	7,889
4	FCFF₄	12,704	= 11,783 × (1 + 7.81%)	7,441
5	FCFF₅	13,939	= 12,704 × (1 + 9.72%)	7,143
5	Terminal value (TV₅)	333,541	= 13,939 × (1 + 9.72%) ÷ (14.31% – 9.72%)	170,913
Intrinsic value of Walt Disney Co. capital				211,262
Less: Borrowings and finance lease liabilities (fair value)				43,899
Intrinsic value of Walt Disney Co. common stock				167,363

Intrinsic value of Walt Disney Co. common stock (per share)				$92.42
Current share price				$114.26

Based on: 10-K (reporting date: 2024-09-28).

¹ See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Walt Disney Co., cost of capital

	Value¹	Weight	Required rate of return²	Calculation
Equity (fair value)	206,918	0.82	16.59%
Borrowings and finance lease liabilities (fair value)	43,899	0.18	3.57%	= 4.80% × (1 – 25.62%)

Based on: 10-K (reporting date: 2024-09-28).

¹ US$ in millions

Equity (fair value) = No. shares of common stock outstanding × Current share price
= 1,810,939,306 × $114.26
= $206,917,925,103.56

Borrowings and finance lease liabilities (fair value). See details »

² Required rate of return on equity is estimated by using CAPM. See details »

Required rate of return on debt. See details »

Required rate of return on debt is after tax.

Estimated (average) effective income tax rate
= (23.70% + 28.90% + 32.80% + 1.00% + 21.00% + 21.70%) ÷ 6
= 25.62%

WACC = 14.31%

FCFF growth rate (g) implied by PRAT model

Walt Disney Co., PRAT model

	Average	Sep 28, 2024	Sep 30, 2023	Oct 1, 2022	Oct 2, 2021	Oct 3, 2020	Sep 28, 2019
Selected Financial Data (US$ in millions)
Interest expense		2,070)	1,973)	1,549)	1,546)	1,647)	1,246)
Income (loss) from discontinued operations, net of income tax		—)	—)	(48)	(29)	(32)	671)
Net income (loss) attributable to The Walt Disney Company (Disney)		4,972)	2,354)	3,145)	1,995)	(2,864)	11,054)

Effective income tax rate (EITR)¹		23.70%	28.90%	32.80%	1.00%	21.00%	21.70%

Interest expense, after tax²		1,579)	1,403)	1,041)	1,531)	1,301)	976)
Add: Dividends		1,366)	—)	—)	—)	1,587)	2,895)
Interest expense (after tax) and dividends		2,945)	1,403)	1,041)	1,531)	2,888)	3,871)

EBIT(1 – EITR)³		6,551)	3,757)	4,234)	3,555)	(1,531)	11,359)

Short-term finance lease liabilities		30)	37)	37)	41)	37)	5)
Current portion of borrowings		6,845)	4,330)	3,070)	5,866)	5,711)	8,857)
Borrowings, excluding current portion		38,970)	42,101)	45,299)	48,540)	52,917)	38,129)
Long-term finance lease liabilities		160)	206)	219)	246)	271)	146)
Total Disney Shareholder’s equity		100,696)	99,277)	95,008)	88,553)	83,583)	88,877)
Total capital		146,701)	145,951)	143,633)	143,246)	142,519)	136,014)
Financial Ratios
Retention rate (RR)⁴		0.55	0.63	0.75	0.57	—	0.66
Return on invested capital (ROIC)⁵		4.47%	2.57%	2.95%	2.48%	-1.07%	8.35%
Averages
RR	0.63
ROIC	3.29%

FCFF growth rate (g)⁶	2.08%

Based on: 10-K (reporting date: 2024-09-28), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28).

¹ See details »

2024 Calculations

² Interest expense, after tax = Interest expense × (1 – EITR)
= 2,070 × (1 – 23.70%)
= 1,579

³ EBIT(1 – EITR) = Net income (loss) attributable to The Walt Disney Company (Disney) – Income (loss) from discontinued operations, net of income tax + Interest expense, after tax
= 4,972 – 0 + 1,579
= 6,551

⁴ RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [6,551 – 2,945] ÷ 6,551
= 0.55

⁵ ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 6,551 ÷ 146,701
= 4.47%

⁶ g = RR × ROIC
= 0.63 × 3.29%
= 2.08%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value₀ × WACC – FCFF₀) ÷ (Total capital, fair value₀ + FCFF₀)
= 100 × (250,817 × 14.31% – 10,482) ÷ (250,817 + 10,482)
= 9.72%

where:

Total capital, fair value₀ = current fair value of Walt Disney Co. debt and equity (US$ in millions)
FCFF₀ = the last year Walt Disney Co. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Walt Disney Co. capital

FCFF growth rate (g) forecast

Walt Disney Co., H-model

Year	Value	g_t
1	g₁	2.08%
2	g₂	3.99%
3	g₃	5.90%
4	g₄	7.81%
5 and thereafter	g₅	9.72%

where:
g₁ is implied by PRAT model
g₅ is implied by single-stage model
g₂, g₃ and g₄ are calculated using linear interpoltion between g₁ and g₅

Calculations

g₂ = g₁ + (g₅ – g₁) × (2 – 1) ÷ (5 – 1)
= 2.08% + (9.72% – 2.08%) × (2 – 1) ÷ (5 – 1)
= 3.99%

g₃ = g₁ + (g₅ – g₁) × (3 – 1) ÷ (5 – 1)
= 2.08% + (9.72% – 2.08%) × (3 – 1) ÷ (5 – 1)
= 5.90%

g₄ = g₁ + (g₅ – g₁) × (4 – 1) ÷ (5 – 1)
= 2.08% + (9.72% – 2.08%) × (4 – 1) ÷ (5 – 1)
= 7.81%

Walt Disney Co. (NYSE:DIS)

Present Value of Free Cash Flow to the Firm (FCFF)

Intrinsic Stock Value (Valuation Summary)

Weighted Average Cost of Capital (WACC)

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

FCFF growth rate (g) implied by single-stage model

FCFF growth rate (g) forecast