Walt Disney (DIS 0.01%) is due to report fiscal Q3 earnings on Tuesday, August 9. One analyst, however, is not waiting around for the bad news. Instead, it's downgrading the stock right now.

Last night, after close of trading for Tuesday but before markets opened on Wednesday, ace stock picker Stifel Nicolaus announced that it is downgrading Disney stock. According to a write-up on StreetInsider.com, the analyst is citing valuation as its reason for downgrading. But there's quite a bit more to the story than just that.

Here are three things you need to know about the downgrade.

What do you mean someone just downgraded Disney stock? Image source: Getty Images.

1. Stifel Nicolaus likes everything about Disney

Somewhat curiously for a downgrade, Stifel Nicolaus actually spent most of its time last night talking about how much it likes Disney stock. Drawing particular praise were Disney's consumer products and studio segments.

Data from S&P Global Market Intelligence show that Disney earns a 38.9% operating profit margin on consumer products (i.e., toys) and 26.8% on its studio business. These robust profit margins, reminiscent of successful software industry profits, "continue to deserve a strong multiple," says Stifel.

Parks and resorts are no slouch, either, at 18.8% profit margins. And according to Stifel, those margins are likely to go up as Disney starts earning back the start-up costs associated with opening Shanghai Disneyland.

2. Literally everything

In fact, even the things that Stifel doesn't like about Disney, it kind of does like. Stifel expresses "concern around the carriage and MVPD subscriber numbers at ESPN YTD," for example, and predicts that "F2017 will be a likely flat year" for Disney's cable operations.

At the same time, though, Stifel says "the sports rights license environment [is] one which despite ... subscriber concerns continues to favour the rights holder" (i.e., the owner of the copyright to the intellectual property -- Disney). Stifel expects to see "continued inflation in this area," meaning it expects Disney to be able to continue raising prices -- and profits.

3. Well, everything except the valuation

So far, this sounds like one of the stranger downgrades on record. It gets even stranger when you notice that despite pulling its buy rating from Disney, and downgrading to hold, Stifel still values Disney stock at $110 per share. So why is Stifel downgrading Disney stock at all?

Well, it's worth pointing out that Stifel has held a $110 price target on Disney for some time now, and that the stock has already climbed 10% from its February lows. Presumably, Stifel thinks that's close enough to its target to justify taking some profits off the table before earnings come out and have a chance to spook (other) investors.

Final thing: How scary is this stock price?

And spook they might. After all, Disney stock at 18 times earnings is hardly cheap. Most analysts who follow the stock expect to see Disney grow earnings at about 10.8% annually over the next five years. Combined with Disney stock's 1.4% dividend yield, that works out to a total return of only 12.2% on the 18 P/E stock, and a PEG ratio of 1.5.

Some might argue that Disney is worth that premium valuation -- because there's really only one Disney in the world, and no one else really comes close to rivaling its brand. At the same time, though, I can't help noticing that with only $7.1 billion in trailing free cash flow, versus $9.1 billion in reported earnings, Disney is only earning about $0.78 in real cash profit for every $1 in "earnings" it reports on its income statement.

That's a big disconnect, big enough to push Disney's price-to-free-cash-flow ratio up to 22.4, and its enterprise-value-to-FCF ratio up to 25. In my view, it's also a good reason for Stifel to worry about the valuation at Disney -- and to downgrade Disney stock.