With its iconic franchises and well-known characters, Disney (DIS 0.29%) is a company that most people are familiar with today, but that doesn’t mean it has proven to be a great investment. In fact, equities have only achieved a total return of 14% over the past decade, well behind the broader S&P500 by a wide margin. At the time of writing this article Top media inventory is trading 57% below its high price from early 2021.

Could Disney be a safe investment now that stock prices are at rock bottom?

Encouraging results

Disney has some momentum on its side. That’s because the company just reported better-than-expected financial results for its third quarter of fiscal 2024 (which ended June 29). Revenue of $23.2 billion was up 4% year over year, driven by 2% growth in the Experiences segment and 4% in the Entertainment division, which houses the company’s various media assets.

Not only that, Disney was also able to improve its bottom line. Earnings per share (EPS) rose 35%. Management reiterated its goal of identifying and implementing major cost reductions totaling $7.5 billion. “We will continue to be as aggressive as possible to both improve the bottom line and reinvest in the business with all the great opportunities we have,” said CFO Hugh Johnston at the Conference Call on Q3 2024 Results.

The management team’s optimism was evident as it raised its full-year adjusted earnings per share forecast to be 30% higher than in fiscal 2023.

Making the transition

Perhaps the biggest factor weighing on Disney shares is the uncertainty about how the company will handle the ongoing industry shift from traditional cable television to a streaming-dominated space. On the one hand, one can argue that the launch of Disney+ in November 2019 came a little too late, as NetflixThe enormous success of up to that point was already proof that streaming would be the preferred way to watch video entertainment.

On the other hand, the company’s progress so far deserves recognition. Combined, all of Disney’s streaming services – including Disney+, Hulu and ESPN+ – reported operating profit of $47 million, a significant improvement from the $512 million loss in the same period last year. This was helped by a 15% jump in revenue.

With 154 million subscribers, Disney+ already seems to be one of the winners in the global streaming war. And with the planned launch of a standalone ESPN streaming app in 2025, it’s hard to imagine a world where Disney doesn’t attract more subscribers.

“We remain on track to improve the profitability of our combined streaming businesses in the fourth quarter,” the latest press release states.

While Disney’s linear business continues to be a melting ice cube as households cancel their cable subscriptions, it is still a moneymaker. In its most recent fiscal quarter, revenue fell 7% year over year. But the division generated operating income of nearly $1 billionwhich corresponds to a fantastic margin of 36%.

Zoom out

It’s hard to stomach a stock that’s down 57% over the past three and a half years. Still, it’s easy to be optimistic. Disney’s strong brand name and unique intellectual property (IP) are so valuable. Plus, there’s no company in the media and entertainment industry that can monetize that IP like Disney, whether through the box office, linear channels, streaming platforms, theme parks, or consumer products.

With shares trading at less than 18 times Wall Street’s forecast adjusted earnings per share for fiscal 2024 and less than 16 times the forecast for fiscal 2025, I believe Disney is a clear buying opportunity right now.