The Walt Disney Company (NYSE:DIS) was founded in 1923 but did not go public until 1957, when it floated on the New York Stock Exchange with a share price of $13.88. The company’s shares have risen 4,500% since then, parallel to steady earnings growth.

However, the last few years have not been good for the entertainment giant.

The chart above shows that Disney stock was trending upward in a largely normal way until the pandemic hit in 2020, when park and movie theater closures brought large parts of the business to a halt. The company enjoyed a short-lived rally in 2021 as investors flocked to the company’s recently launched streaming expansion. However, since its peak in spring 2021, Disney’s share price has fallen 50%.

Headwinds from the pandemic combined with an expensive entry into the streaming business led to investor withdrawal – a situation from which Disney took years to recover. However, recent results suggest there is finally light at the end of the tunnel and a recovery is underway.

As a result, Disney shares look like bargains after big losses, making it a growth stock worth buying now despite being down 50%.

On a more stable growth path than the competition

Disney released its third-quarter 2024 results on August 7. Revenue rose 4% year-over-year to $23 billion, beating Wall Street estimates by $70 million. Meanwhile, earnings per share of $1.39 beat expectations by $0.20. The period also brought impressive gains in operating profit, which rose 19% year-over-year to over $4 billion.

The increase in profit was largely due to growth in Disney’s entertainment segment, where operating profit nearly tripled following a major success in streaming. In the third quarter of 2024, the company’s streaming business, which includes revenue from Disney+, ESPN+ and Hulu, broke even for the first time – a quarter earlier than expected.

Getting into the streaming industry is notoriously difficult and expensive. The chart above compares the profit growth of some of the largest entertainment companies. Warner Bros. Discovery And Comcast have experienced significantly less financial growth than Disney over the past year. While many factors play a role, it is fairly common knowledge that these companies have faced consistent headwinds as they expand into the streaming space.

Meanwhile, Disney’s solid recovery from a global pandemic and subsequent economic downturn demonstrates its resilience and ability to successfully navigate poor market conditions. A recent success in streaming also proves the strength of the Disney brand, as the company has managed to retain subscribers.

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Disney stock is a bargain compared to its potential

Disney has had many successes this year. Not only has the company made profits on streaming, but it is also the only film studio to earn more than $1 billion at the box office in 2024. And Disney has done it twice – with Inside Out 2published in June, and Deadpool and Wolverinewhich debuted in July.

The success of this year’s Dead Pool threequel has revived interest in Disney’s Marvel Cinematic Universe, which had grown stale with audiences after a series of unsuccessful films. However, the box office hit has increased hype for new Marvel titles in 2025, including the Daredevil: Reborn Series for Disney+ and Fantastic Four: First Steps Film that will be released next July.

Recent quarterly results and an exciting content roadmap have put Disney on a promising growth path. The company’s Parks division saw some slowdown in the third quarter of 2024. Operating income was $2 billion, down 3% year over year.

However, parks revenues often fluctuate depending on the economy and consumer purchasing power, which has faced uncertainty in recent years. Streaming growth remains a good reason to invest in Disney, as it diversifies the business and allows the company to rely less on the parks.

Furthermore, this chart shows that Disney stock may be trading at its best value in years, with its price-to-earnings (P/E) and price-to-sales (P/S) ratios below their five-year averages.

Repeated declines in Disney’s business since 2019 have pushed up the P/E and P/S at times. However, positive quarterly results and a sell-off in recent years have made Disney’s current position a bargain compared to its potential. The company is in recovery mode, so now is an excellent time to buy this well-known growth stock on dips.

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Dani Cook does not own any stocks mentioned. The Motley Fool owns and recommends Walt Disney and Warner Bros. Discovery. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

1 Growth Stock Down 50% to Buy Now was originally published by The Motley Fool