At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." Today, we'll show you whether those bigwigs actually know what they're talking about. To help, we've enlisted Motley Fool CAPS to track the long-term performance of Wall Street's best and worst.

Foreclosing on the House of Mouse
By all rights, Thursday should have been a good day for Disney (NYSE: DIS) investors. The company announced a new chain of "Disney Baby" retail stores aimed at turning today's toddlers into the product-happy Mouseketeers of tomorrow. The company's media unit confirmed it snagged an average 11% to 12% rise in ad rates on this year's ABC network. That's better than News Corp.'s (NYSE: NWSA) Fox, Comcast's (Nasdaq: CMCSA) NBC, and almost anybody except CBS (NYSE: CBS), which pulled down rate hikes as high as 15%.

Good news, right? Yet the House of Mouse sat in a sinkhole yesterday, with a 0.36% share price gain barely half that of the Dow average. What went wrong?

Davenport disses Disney
In a word: Davenport. According to this analyst, investors are getting far too warm and fuzzy over the House of Mouse's prospects. With gas prices circling $4 a gallon, and unemployment once again back above 9%, Davenport sees little chance of a big recovery at Disney's parks and resorts. The ad rates were good, true, but Davenport warns that any gains there may be offset by increasing content costs at ABC. Meanwhile, Disney's TV syndication pipeline looks weak, and its interactive segment is continuing to wallow in losses.

In Davenport's estimation, all this adds up to a stock no longer worth buying, and unlikely to rise beyond $42 per share.

Let's go to the tape
Knowing Davenport is down on Disney should probably scare the red, two-buttoned, Mickey Mouse short-pants right off you.

Davenport an ace stockpicker in general, outperforming 96% of the investors we track on CAPS. Worse yet for Disney, Davenport also boasts a perfect 100% record for accuracy in the House of Mouse's home Media industry, having picked both Disney and both flavors of Viacom to outperform back in 2008. Since then, Davenport's crushed the S&P 500's returns on all three picks. Sadly, I'm pretty sure Davenport is calling it right again with this week's downgrade.

Valuation matters
At first glance, Disney doesn't look all that expensive, at just 17.4 times earnings -- cheaper than Comcast or CBS, after all. But it's also more expensive than rival cartoon kingpin DreamWorks (NYSE: DWA), and pricier than motion picture makers Time Warner (NYSE: TWX) and News Corp. as well.

Sure, a 17.4 P/E doesn't look outrageously expensive in light of Disney's 15% long-term growth forecast. But as I explained last month, there's a small problem with the "E" at Disney. Actual free cash flow lags reported net income by about 10%. Value Disney on its free cash flow, and tweak its price to account for the company's near-$10 billion net debt load, and you wind up with an enterprise value-to-free cash flow ratio of nearly 21 on this 15% grower.

Foolish takeaway
I won't say Disney is the most expensive stock I'm watching today. It's not as obviously overvalued as it was when I called foul on Stifel Nicolaus's buy-rating last month. But to be perfectly blunt, this is largely a result of my predication having been correct back then, and Disney's stock having declined in value since.

Much as I'd love to tell you today that the stock has fallen all the way back into bargain territory, and now's the time to begin buying again -- I can't. Not at this price.

Wait for better prices. We'll get there eventually. In fact, we're already halfway there.

When will Disney emerge from the maze into bargain territory? Don't guess. Add it to your Fool Watchlist, and we'll tell you when it happens.

Motley Fool newsletter services have recommended buying shares of DreamWorks Animation SKG and Walt Disney. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 457 out of more than 170,000 members. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.