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Disney Stock: Jim Cramer Says It's Time to Buy. Is It?

The Mad Money host believes this is an opportunity to buy a great company at an even better price. Is it time to purchase Disney shares?

Disney  (DIS) - Get Walt Disney Company Report was founded in 1923, so it’s no stranger to volatility. The company has survived recessions, depressions, wars, and all other manner of calamity.

But fast-forward to 2020 and the unique challenges COVID-19 presented us with. Disney reported that the virus – which shut movie theaters and theme parks – wiped more than $6 billion off the company’s bottom line last year.

And just when things started to get better, they took a turn for the worse. During Disney’s most recent earnings call, it announced that subscriber growth for its video streaming service had reduced to its slowest pace in two years.

Plus, uncertainty over new COVID-19 variants has many Mouseketeers wondering if the company may shut its theme parks down or suspend its cruises again.

Those worries have led to new volatility in Disney’s stock.

Right now, Disney shares are trading around $150. That’s nearly $50 below their all-time high in March 2021.

Figure 1: Disney stock price throughout 2021.

Figure 1: Disney stock price throughout 2021.

But even though Disney looks to be on the decline, there are still investors who believe right now is a great time to buy its shares. Among them is Jim Cramer, host of CNBC’s Mad Money.

Let’s dig into why Cramer thinks investors should pay attention to DIS in the coming months.

Figure 2: MadMoney's Jim Cramer.

Figure 2: MadMoney's Jim Cramer.

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Where Jim Cramer Thinks Disney Is Headed

The CNBC host recently told viewers he believes Disney is a buy, even after losing one-third of its share price since March.

He also said that – although a few analysts believe DIS is currently overvalued – the stock is actually undervalued, considering its expectations for 2022.

Hopefully, theme parks and movie theaters will remain open for the entirety of next year. That should seriously increase Disney’s revenue and cash flow.

In addition, Cramer isn’t worried about the recent underwhelming results from Disney+, the company’s video streaming service. He believes that Disney can boost those numbers back up with new content, especially hotly anticipated titles like the next season of The Mandalorian.

Cramer emphasized to his viewers that it’s Disney’s stock that’s “broken,” not the company. He pointed out that Disney is an icon that isn’t going to just go away.

As a whole, the market has a very optimistic forecast for Disney in 2022. The consensus expects its earnings per share (EPS) growth to improve 99% year-over-year during the first quarter.

Figure 3: DIS EPS surprise & estimates by quarter.

Figure 3: DIS EPS surprise & estimates by quarter.

Our Take

Disney is nearly a century old and has a brand that’s recognized throughout the world.

The pandemic has certainly affected the company, and its stock has underperformed the market. But Disney has continued to invest in business segments that keep it a nimble and diverse company.

For example, Disney+ has nearly 120 million subscribers right now. That number is expected to grow to 230 million in 2024.

DIS shares might currently be cheaper than they’ve been in a few months. But that’s a buying opportunity for investors who believe the company should continue to increase its profits for years to come.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting MavenFlix)