Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Walt Disney Company's cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 7.1% to 4.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 56, DPO 104, DIO 12). At a 7.6% WACC with mid-year discounting, the terminal value (63% of enterprise value) is derived from the Gordon Growth Model on Year 11 FCFF at a 2.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $155.41 per share, suggesting DIS is undervalued by 63.5% at the current price of $95.03.
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| 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 | Terminal | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Profit Before Tax | 14,776 | 15,423 | 16,071 | 16,703 | 16,940 | 18,265 | 19,517 | 20,668 | 21,686 | 22,546 | 23,110 |
| (−) Net Interest | 1,882 | 1,965 | 2,047 | 2,128 | 2,158 | 2,327 | 2,486 | 2,633 | 2,763 | 2,872 | 2,944 |
| (+) D&A | 5,385 | 5,935 | 6,268 | 6,650 | 6,999 | 6,845 | 7,143 | 7,494 | 7,888 | 8,315 | 8,523 |
| EBITDA | 22,044 | 23,323 | 24,386 | 25,481 | 26,096 | 27,436 | 29,147 | 30,795 | 32,337 | 33,733 | 34,576 |
| (−) Tax | 2,202 | 2,298 | 2,394 | 2,489 | 2,524 | 2,721 | 2,908 | 3,079 | 3,231 | 3,359 | 3,443 |
| (−) CapEx | 6,328 | 6,605 | 6,882 | 7,153 | 7,255 | 7,822 | 8,359 | 8,851 | 9,287 | 9,656 | 9,897 |
| (−) ΔWC | -1,389 | -48 | -48 | -47 | -18 | -98 | -93 | -85 | -75 | -64 | -65 |
| Free Cash Flow (FCFF) | 14,903 | 14,468 | 15,157 | 15,886 | 16,335 | 16,991 | 17,973 | 18,949 | 19,894 | 20,782 | 21,301 |
| Terminal Value | 419,440 | ||||||||||
| WACC / Discount Rate | 7.6% | ||||||||||
| Long-term Growth Rate | 2.5% | ||||||||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5.5 | 6.5 | 7.5 | 8.5 | 9.5 | 5 |
| Present Value of FCF | 14,368 | 12,966 | 12,627 | 12,302 | 11,759 | 11,369 | 11,179 | 10,956 | 10,692 | 10,382 | 202,030 |
| Enterprise Value | 320,630 | ||||||||||
| Projection Period | 118,600 | 37.0% | |||||||||
| Terminal Value | 202,030 | 63.0% | |||||||||
| (−) Current Net Debt | 39,182 | ||||||||||
| Equity Value | 281,448 | ||||||||||
| (/) Outstanding Shares | 1,811 | ||||||||||
| Fair Price | $155.41 | ||||||||||
| WACC \ Terminal Growth Rate | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.6% | $218 | $241 | $272 | $315 | $379 |
| 6.6% | $169 | $183 | $199 | $221 | $249 |
| 7.6% | $137 | $145 | $155 | $168 | $183 |
| 8.6% | $114 | $120 | $126 | $134 | $143 |
| 9.6% | $97 | $101 | $105 | $110 | $116 |
Current price: $95.03. Green = undervalued, Red = overvalued.
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 10-year projection period. Revenue is projected using analyst consensus estimates for the first 3–5 years, then gradually fading toward long-term GDP growth (~3%) for the remaining years. Expenses (COGS, SG&A, R&D, Interest) are modeled as individual line items based on historical ratios. Depreciation is calculated from a vintage matrix that tracks each year's CapEx depreciated straight-line over its useful life. Working capital is projected using historical turnover days (DSO, DPO, DIO).
The longer 10-year horizon reduces the weight of the terminal value in the total enterprise value, making the model less sensitive to terminal growth assumptions. FCFF equals EBITDA minus taxes, capital expenditure, and change in net working capital. The terminal value is calculated using the Gordon Growth Model on the Year 11 FCFF. Cash flows are discounted at the Weighted Average Cost of Capital (WACC) using mid-year convention. Enterprise value is converted to equity value by subtracting net debt (total debt minus cash).