Netflix's jaw-dropping success sparked the streaming movement. And now, the industry is crowded with numerous players all jockeying for viewership in the attention economy.
There's one well-known Netflix rival, which itself has long been a juggernaut in the media and entertainment industry, that is posting skyrocketing streaming profits. And the stock is down 48% from its peak (as of Feb. 5).
Is this a bargain opportunity that's ready for a bull run?
Image source: Walt Disney.
Better late than never
It's crazy to think that Netflix launched its streaming service all the way back in 2007. It wasn't until the end of 2019 that Walt Disney (DIS 1.30%) stepped into the ring. In November of that year, Disney+ hit the market.
It was a rough start. In fiscal 2020 and fiscal 2021, Disney's direct-to-consumer (DTC) streaming operations, which also included Hulu and ESPN+, reported a cumulative operating loss of $4.6 billion. Investors became skeptical about the segment's long-term viability.
The company quickly scaled up its subscriber base, though, thanks in large part to its unmatched intellectual property from the likes of Pixar, Star Wars, and Marvel, all of which have global appeal. The DTC division's operating profit totaled $1.3 billion in fiscal 2025 (ended Sept. 27, 2025). It is expected to be $500 million in the current quarter (Q2 2026), or about $200 million higher than the year-ago period. Tactical pricing actions and expense discipline certainly helped.
Disney has an advantage in the competitive streaming market. With Disney+, Hulu (now fully owned), and ESPN all under the House of Mouse umbrella, the company has content that can satisfy any member of a household. That's why bundling has been such a strategic priority for the management team, as it can reduce churn.
NYSE: DIS
Key Data Points
Is there significant upside?
The market has had a tough time digesting Disney's transition from a cable-TV business to one that's leaning into streaming. And this could be part of the reason why the stock has lost nearly half its value since March 2021.
But the valuation is hard to ignore now. The market is offering the stock to investors at a forward price-to-earnings ratio of 16.2. This is a discount to the 22.2 multiple of the S&P 500 (^GSPC 1.33%).
Disney's leadership team expects double-digit adjusted earnings per share growth this fiscal year. If that pace continues in fiscal 2027 and beyond, with streaming profits providing a lift as it evolved from sizable losses to significant income, the stock could go on a bull run.
