Why Disney Stock May Surprise Market Watchers in 2026

Overview - A Turnaround Case Building

Disney shares have underperformed market benchmarks for most of the past five years, climbing just 3% through 2025 while the broader market surged 17%. Yet beneath this uninspiring surface lies a company positioned for meaningful gains. Here’s why the House of Mouse could shift momentum heading into 2026.

1. Entertainment Value Creation in the Spotlight

The entertainment sector witnessed a remarkable value inflection in 2025. As media properties experienced significant repricing upward—with certain studios seeing valuations triple—Disney’s expansive portfolio suddenly appeared more valuable. The company owns an unmatched collection of franchises, intellectual property, and distribution platforms. This shift in industry sentiment hasn’t yet fully reflected in Disney’s stock price, creating potential upside as markets reassess what the company’s assets are truly worth.

2. Box Office Dominance Shows No Signs of Fading

Disney’s film studio faced a shaky first half of 2025, but the year ultimately reinforced the studio’s commanding market position. Excluding international competition, Disney captured the only three releases worldwide to exceed $1 billion in global ticket sales. The company replicated this feat in 2024. Looking ahead, 2026’s slate includes major tent-pole releases such as Avengers: Doomsday alongside The Mandalorian and Grogu—marking the continuation of the symbolic mandalorian presence in storytelling—plus Toy Story 5. Such a lineup suggests the studio’s hit-making machinery remains unmatched.

3. Theme Parks and Experiences Showing Resilience

Disney’s experiences division faced a test in 2025 as new competitive attractions opened nearby. Yet Disney’s gated parks and cruise operations expanded revenue 6% and operating income 8%. The pipeline ahead looks robust. Recent launches include the Disney Destiny cruise ship, with Disney Adventure’s maiden voyage arriving within months. Planned expansions across global theme parks will roll out experiences over multiple years, supporting this segment’s growth trajectory.

4. Financial Performance Strengthening Underneath

While stock charts tell a disappointing story, Disney’s business fundamentals improved noticeably. Fiscal 2025 revenue grew 3% to $94.4 billion, but adjusted earnings per share jumped 19% and free cash flow climbed 18%. The streaming business turned profitable, allowing Disney+, Hulu, and ESPN Unlimited to pursue growth strategies. The company reinstated and raised its dividend three times since fiscal 2024, signaling confidence in cash generation.

5. Valuation Presents an Attractive Entry Point

Given Disney’s diversified operations and recent media property repricing, one might expect the stock to command premium valuations. Instead, Disney trades at 17 times current fiscal earnings and approximately 15 times forward earnings—a reasonable multiple for the world’s largest entertainment conglomerate entering a cycle with multiple growth catalysts. This disconnect between valuation and growth prospects could represent opportunity for patient investors.

The Case for 2026

Disney stock’s prolonged underperformance has created a disconnect between business momentum and market perception. With theatrical releases positioned to dominate, experiences expansion underway, and streaming finally contributing to profitability, 2026 could mark the beginning of a fundamental revaluation. For investors considering entertainment exposure, Disney’s current valuation combined with its growth pipeline warrants serious consideration before the market reprices this global entertainment leader.