The Walt Disney Company (DIS) Two-Stage Dividend Discount Model

The Walt Disney Company

DIS (NYSE)

(%)

Valuation
The Walt Disney Company Two-Stage Dividend Discount Model

"""
    Model: Two-Stage Dividend Discount Model

# Render model description
model.render_description(r"""
## Two-Stage Dividend Discount Model

Used to estimate the value of companies based on two stages of growth. An initial period of high growth, calculated using **[Sum of Discounted Dividends]**, followed by a period of stable growth, calculated using **[Discounted Terminal Value]**.

Read more: [GitHub Documentation](https://github.com/DiscountingCashFlows/Documentation/blob/main/models-documentation/dividend-discount-models.md#two-stage-dividend-discount-model-source-code)
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "high_growth_years": 5,
        "historical_years": None,
        "%high_growth_rate": None,
        "%high_growth_payout": None,
        "%stable_growth_in_perpetuity": "2.5%",
        "%stable_payout": None,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Set the discount rate to the cost of equity
risk_free_rate = assumptions.get("%risk_free_rate")
beta = assumptions.get("beta")
market_premium = assumptions.get("%market_premium")
cost_of_equity = risk_free_rate + beta * market_premium

assumptions.set("%discount_rate", cost_of_equity)

# Count all dividends excluding None and 0 values
dividend_count = data.count("dividend:adjDividend:*", properties={"except_values": [None, 0]})

if dividend_count <= 0:
    raise ValueError("The company does not currently pay dividends!")

elif dividend_count > 10:
    assumptions.set("historical_years", 10)

else:
    # Set the default historical years to the number of historical dividends
    assumptions.set("historical_years", dividend_count)

# Compute historical values and ratios
data.compute({
    "dividendsPaidToCommon": "dividend:adjDividend * income:weightedAverageShsOut",
    "%returnOnEquity": "income:netIncome / balance:totalStockholdersEquity:-1",
    "%payoutRatio": "dividend:adjDividend / income:eps",
    "%dividendYield": "dividend:adjDividend / quote:close",
    "%adjDividendGrowth": "function:growth:dividend:adjDividend",
    "#discountedAdjDividend": "dividend:adjDividend",
})

# Calculate average return on equity
average_return_on_equity = data.average(f"%returnOnEquity:{-assumptions.get('historical_years')}->0")
stable_payout = 1 - assumptions.get("%stable_growth_in_perpetuity") / average_return_on_equity
assumptions.set("%stable_payout", stable_payout)
assumptions.set_bounds(
    "%stable_payout", low="0%", high="90%"
)

# Calculate the average payout ratio
average_payout_ratio = data.average(f"%payoutRatio:{-assumptions.get('historical_years')}->0")
if average_payout_ratio > 1:
    assumptions.set("%high_growth_payout", assumptions.get("%stable_payout"))
else:
    assumptions.set("%high_growth_payout", average_payout_ratio)

# Calculate average dividend growth rate
average_dividend_growth_rate = data.average(f"%adjDividendGrowth:{-assumptions.get('historical_years')}->0")
assumptions.set("%high_growth_rate", average_dividend_growth_rate)

# Compute 5 years of forecasted values and ratios
data.compute({
    "income:eps": f"""
        income:eps:-1 * 
        (1 + {assumptions.get('%high_growth_rate')})
    """,
    "dividend:adjDividend": f"income:eps * {assumptions.get('%high_growth_payout')}",
    "#discountedAdjDividend": f"""
        function:discount:dividend:adjDividend 
        rate:{assumptions.get('%discount_rate')}
    """,
    "%adjDividendGrowth": "function:growth:dividend:adjDividend",
}, forecast=assumptions.get("high_growth_years"))

# Discount the projected dividends and sum them
sum_of_discounted_dividends = data.sum(f"#discountedAdjDividend:1->{assumptions.get('high_growth_years')}")

# Calculate the discounted terminal value
stable_eps = data.get(f"income:eps:{assumptions.get('high_growth_years')}") * (1 + assumptions.get("%stable_growth_in_perpetuity"))
stable_dividend = stable_eps * assumptions.get("%stable_payout")
terminal_value = stable_dividend / (assumptions.get("%discount_rate") - assumptions.get("%stable_growth_in_perpetuity"))
discounted_terminal_value = terminal_value / ((1 + assumptions.get("%discount_rate")) ** assumptions.get("high_growth_years"))

# The final value calculated by the Two-Stage Dividend Discount Model
final_value = discounted_terminal_value + sum_of_discounted_dividends

model.set_final_value({
    "value": final_value,
    "units": "$"
})

# Render results
model.render_results([
    [sum_of_discounted_dividends, "Sum of discounted dividends", "$"],
    [discounted_terminal_value, "Discounted terminal value", "$"],
    [terminal_value, "Terminal value", "$"],
    [stable_dividend, "Dividend in stable phase", "$"],
    [stable_eps, "EPS in stable phase", "$"],
    [average_dividend_growth_rate, "Average historical Dividend Growth Rate", "%"],
    [average_payout_ratio, "Average historical Payout Ratio", "%"],
    [average_return_on_equity, "Average historical Return on Equity", "%"],
])

# Render chart for projected dividends
model.render_chart({
    "data": {
        "income:eps": "Earnings Per Share",
        "dividend:adjDividend": "Dividend",
        "#discountedAdjDividend": "Discounted Dividends"
    },
    "start": -assumptions.get('historical_years'),
    "properties": {
        "title": "Historical and Projected Dividends",
        "set_editable": [
            "income:eps",
            "dividend:adjDividend"
        ],
        "hidden_keys": [
            "#discountedAdjDividend"
        ],
    }
})

# Render Dividend Table
model.render_table({
    "data": {
        "income:eps": "Earnings Per Share",
        "dividend:adjDividend": "Dividend per Share",
        "%adjDividendGrowth": "Dividend Growth Rate",
        "#discountedAdjDividend": "Discounted Dividend",
    },
    "start": -1,
    "properties": {
        "title": "Projected data",
        "order": "ascending",
    },
})

# Render Historical Table
model.render_table({
    "data": {
        "income:netIncome": "Net Income",
        "balance:totalStockholdersEquity": "Equity",
        "%returnOnEquity": "Return on Equity",
        "dividendsPaidToCommon": "Common Dividends",
        "%payoutRatio": "Payout Ratio",
        "income:weightedAverageShsOut": "Shares Outstanding",
        "quote:close": "Reference Market Price",
        "income:eps": "EPS",
        "dividend:adjDividend": "Dividend per Share",
        "%adjDividendGrowth": "Dividend Growth Rate",
        "%dividendYield": "Dividend Yield",
    },
    "start": -assumptions.get('historical_years'),
    "end": 0,
    "properties": {
        "title": "Historical data",
        "number_format": "M",
        "display_averages": True
    },
})

assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"high_growth_years": r"""
        ## High Growth Years

The estimated number of years during which the company is expected to experience high growth. After this period, the company will transition to a stable growth phase.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"%high_growth_rate": r"""
        ## High Growth Rate

The estimated growth rate of Earnings Per Share (EPS) during the high-growth phase.
    """,

"%high_growth_payout": r"""
        ## High Growth Payout

The estimated dividend payout rate expressed as a percentage of Earnings Per Share (EPS) during the high-growth phase.
    """,

"%stable_growth_in_perpetuity": r"""
        ## Stable Growth in Perpetuity

The estimated stable rate at which the company's Earnings Per Share (EPS) will grow in perpetuity after the last projected period.
    """,

"%stable_payout": r"""
        ## Stable Payout

The estimated dividend payout rate expressed as a percentage of Earnings Per Share (EPS) after the last projected period.
    """,
})

print("End of model")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Two-Stage Dividend Discount Model

Used to estimate the value of companies based on two stages of growth. An initial period of high growth, calculated using [Sum of Discounted Dividends], followed by a period of stable growth, calculated using [Discounted Terminal Value].

Interactive Assumptions

Discount Rate Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
High Growth Years High Growth Years High Growth Years The estimated number of years during which the company is expected to experience high growth. After this period, the company will transition to a stable growth phase.	#
Historical Years Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
High Growth Rate High Growth Rate High Growth Rate The estimated growth rate of Earnings Per Share (EPS) during the high-growth phase.	%
High Growth Payout High Growth Payout High Growth Payout The estimated dividend payout rate expressed as a percentage of Earnings Per Share (EPS) during the high-growth phase.	%
Stable Growth In Perpetuity Stable Growth In Perpetuity Stable Growth in Perpetuity The estimated stable rate at which the company's Earnings Per Share (EPS) will grow in perpetuity after the last projected period.	%
Stable Payout Stable Payout Stable Payout The estimated dividend payout rate expressed as a percentage of Earnings Per Share (EPS) after the last projected period.	%

Results
Sum of discounted dividends	15.7 USD
Discounted terminal value	295.7 USD
Terminal value	491.4 USD
Dividend in stable phase	40.25 USD
EPS in stable phase	51.18 USD
Average historical Dividend Growth Rate	48.65%
Average historical Payout Ratio	17.3%
Average historical Return on Equity	11.7%

Historical and Projected Dividends

Monetary values in USD

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Edit Chart Values	2026-09-27	2027-09-27	2028-09-27	2029-09-27	2030-09-27

↳ Growth Rate

Projected data

Monetary values in USD amounts except #	2025 Sep 27	LTM Mar 20	2026 Sep 27	2027 Sep 27	2028 Sep 27	2029 Sep 27	2030 Sep 27
Earnings Per Share	6.88	6.8	10.23	15.2	22.6	33.59	49.94
Dividend per Share	1.25	1.5	1.77	2.63	3.91	5.81	8.64
Dividend Growth Rate	31.58%	20%	41.54%	48.65%	48.65%	48.65%	48.65%
Discounted Dividend	1.25	1.5	1.6	2.15	2.88	3.87	5.2

Historical data

Monetary values in USD amounts except #	Average	LTM Mar 20	2025 Sep 27	2024 Sep 28	2023 Sep 30	2022 Oct 01	2021 Oct 02	2020 Oct 03	2019 Sep 30	2018 Sep 30	2017 Sep 30	2016 Sep 30
Net Income	6,935	12,252	12,404	4,972	2,354	3,145	1,995	-2,864	11,054	12,598	8,980	9,391
Equity	82,517	108,476	109,869	100,696	99,277	95,008	88,553	83,583	88,877	48,773	41,315	43,265
Return on Equity	11.7%	11.15%	12.32%	5.01%	2.48%	3.55%	2.39%	-3.22%	22.66%	30.49%	20.76%	21.09%
Common Dividends	1,476	2,679	2,255	1,734	548.4	0	0	0		2,578	2,540	2,427
Payout Ratio	17.3%	22.06%	18.17%	34.93%	23.26%	0%	0%	0%		20.48%	28.27%	25.87%
Shares Outstanding	1,731	1,786	1,804	1,825	1,828	1,822	1,816	1,808	1,656	1,499	1,568	1,629
Reference Market Price	111.0	99.22	113.5	96.01	81.05	94.33	176.0	122.6	130.3	116.9	98.57	92.86
EPS	4.14	6.8	6.88	2.72	1.29	1.73	1.1	-1.58	6.68	8.4	5.73	5.76
Dividend per Share	0.883	1.5	1.25	0.95	0.3	0	0	0		1.72	1.62	1.49
Dividend Growth Rate	48.66%	20%	31.58%	216.7%						6.17%	8.72%	8.76%
Dividend Yield	0.869%	1.51%	1.1%	0.989%	0.37%	0%	0%	0%		1.47%	1.64%	1.6%

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The Walt Disney Company Two-Stage Dividend Discount Model

Estimated Value

USD

Market Price USD

Two-Stage Dividend Discount Model

Interactive Assumptions

Discount Rate

Discount Rate

Beta

Beta

Risk Free Rate

Risk-Free Rate

Market Premium

Market Premium

High Growth Years

High Growth Years

Historical Years

Historical Years

High Growth Rate

High Growth Rate

High Growth Payout

High Growth Payout

Stable Growth In Perpetuity

Stable Growth in Perpetuity

Stable Payout

Stable Payout

Results

Historical and Projected Dividends

Projected data

Historical data

Discounted Cash Flow to Firm - Perpetual Growth

Earnings Power Value

Simple Dividend Discount Model

Simple Excess Return Model

Two-Stage Dividend Discount Model

Two-Stage Excess Return Model

Discounted Cash Flow to Firm - Exit Multiple

Discounted Future Market Cap

Peter Lynch Fair Value

Altman Z-Score

Beneish M-Score

Capital Asset Pricing Model (CAPM)

Margin Analysis

Piotroski F-Score

Return on Invested Capital (ROIC)

Shiller PE (CAPE) Ratio

Weighted Average Cost of Capital (WACC)