Startling news hit the media industry on Nov. 20 when Walt Disney (DIS 0.16%) announced that Bob Iger would be returning as the company's CEO, effective immediately. Iger ran Disney for 15 years but announced his retirement in early 2020, with Bob Chapek taking over in his stead.

Now, Iger is replacing his own successor under a two-year contract with the goal of finding another successor CEO at the end of his term. Shares of Disney stock popped on the news, but many investors are concerned about the executive culture at Disney as the company tries to navigate its internet transition and the slow demise of movie theaters.

I think these investor concerns are warranted. If you are nervous about Disney's revolving door in the executive suite, it may be time to look at entertainment competitor Nintendo (NTDOY -1.16%) for your portfolio instead.

Disney-like entertainment brands

Investors love Disney for its top-notch entertainment brands like Pixar, Marvel, and Star Wars. Very few companies can match the breadth and quality of the intellectual property (IP) that Disney offers to consumers, especially for families and kids. In fact, I'd wager there is only one company that is even close to matching Disney's entertainment IP: Nintendo.

With characters like Mario, Zelda, and Donkey Kong, and huge franchises like Pokémon, Animal Crossing, and Splatoon, Nintendo has been a leader in the video game market for decades. Kids around the world love interacting with these franchises, allowing Nintendo to consistently put out gaming content year after year. For example, the latest Pokémon game sold a whopping 10 million copies within the first three days of its release. At an average selling price of $60 for each game, that equates to $600 million in revenue in just three days.

A profitable core business plus expansion plans

Nintendo's core business is selling video game hardware and publishing video game titles exclusively for that hardware device. This vertically integrated model is highly profitable as long as Nintendo sells enough high-margin software titles, which it has consistently done over the past few years. This fiscal year, management is guiding for the company to sell 210 million software units and generate $2.89 billion in net income. Software units also include online subscriptions for its Switch gaming devices, which hit 36 million subscribers as of the end of September.

The video game business should continue to generate profits for Nintendo, but a lot of revenue growth should come from its expansion outside of gaming to become a more Disney-like entertainment conglomerate. Management has four pillars to this strategy: visual content, theme parks, mobile applications, and merchandise. This expansion is just coming to fruition, with four Nintendo theme parks set to open up around the world within the next few years and a Super Mario movie set to be released in early 2023.

Given how much people love Nintendo's entertainment characters, I think this expansion strategy has a high likelihood of success and can drive earnings growth for many years. Compared to Disney, whose expansion into theme parks, merchandise, and other commercial segments is in a mature state, Nintendo has an easier opportunity to grow its revenue and earnings this decade and beyond. 

Nintendo trades at a cheap valuation

As investors, we shouldn't forget about the price being paid to take an ownership stake in a business. For Nintendo, investors have the opportunity to take a position in this entertainment giant at a cheap valuation. With a market cap of $50.3 billion and $11.4 billion in net cash on its balance sheet, the stock has an enterprise value of $38.9 billion. Compared to its net income guidance for this fiscal year of $2.89 billion, that gives Nintendo stock an enterprise value-to-earnings multiple of 13.5, which is well below the market average. 

For a company with high-quality entertainment IP and a clear path to grow its earnings over the next decade, today's Nintendo stock price looks like a steal for long-term investors.