Stock Analysis on Net

Walt Disney Co. (NYSE:DIS)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Walt Disney Co., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018
Net operating profit after taxes (NOPAT)1 3,406 6,699 2,215 (2,053) 16,211 12,203
Cost of capital2 13.42% 13.18% 13.39% 13.21% 13.77% 14.39%
Invested capital3 173,764 173,977 172,934 174,594 169,178 79,665
 
Economic profit4 (19,918) (16,226) (20,937) (25,124) (7,093) 741

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,40613.42% × 173,764 = -19,918

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Walt Disney Co. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Net Operating Profit after Taxes (NOPAT)

Walt Disney Co., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018
Net income (loss) attributable to The Walt Disney Company (Disney) 2,354 3,145 1,995 (2,864) 11,054 12,598
Deferred income tax expense (benefit)1 (1,365) 168 (1,252) (275) 2,081 (1,581)
Increase (decrease) in allowance for credit losses2 (43) (12) (256) 83 103 5
Increase (decrease) in deferred revenues3 87 1,810 447 (468) 1,134
Increase (decrease) in restructuring reserves4 (50) (307) (319) 676
Increase (decrease) in equity equivalents5 (1,321) 1,916 (1,368) (979) 3,994 (1,576)
Interest expense 1,973 1,549 1,546 1,647 1,246 682
Interest expense, operating lease liability6 144 98 87 85 404 262
Adjusted interest expense 2,117 1,647 1,633 1,732 1,650 944
Tax benefit of interest expense7 (445) (346) (343) (364) (347) (231)
Adjusted interest expense, after taxes8 1,672 1,301 1,290 1,368 1,304 713
Interest income, investment income and other (424) (90) (307)
Investment income, before taxes (424) (90) (307)
Tax expense (benefit) of investment income9 89 19 64
Investment income, after taxes10 (335) (71) (243)
(Income) loss from discontinued operations, net of tax11 48 29 32 (671)
Net income (loss) attributable to noncontrolling interest 1,036 360 512 390 530 468
Net operating profit after taxes (NOPAT) 3,406 6,699 2,215 (2,053) 16,211 12,203

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses.

3 Addition of increase (decrease) in deferred revenues.

4 Addition of increase (decrease) in restructuring reserves.

5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to The Walt Disney Company (Disney).

6 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,998 × 3.60% = 144

7 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,117 × 21.00% = 445

8 Addition of after taxes interest expense to net income (loss) attributable to The Walt Disney Company (Disney).

9 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 424 × 21.00% = 89

10 Elimination of after taxes investment income.

11 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Walt Disney Co. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Cash Operating Taxes

Walt Disney Co., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018
Income tax expense from continuing operations 1,379 1,732 25 699 3,031 1,663
Less: Deferred income tax expense (benefit) (1,365) 168 (1,252) (275) 2,081 (1,581)
Add: Tax savings from interest expense 445 346 343 364 347 231
Less: Tax imposed on investment income 89 19 64
Cash operating taxes 3,100 1,891 1,555 1,338 1,297 3,475

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Walt Disney Co. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Invested Capital

Walt Disney Co., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018
Short-term finance lease liabilities 37 37 41 37 5 12
Current portion of borrowings 4,330 3,070 5,866 5,711 8,857 3,790
Borrowings, excluding current portion 42,101 45,299 48,540 52,917 38,129 17,084
Long-term finance lease liabilities 206 219 246 271 146 142
Operating lease liability1 3,998 3,634 3,620 3,387 3,704 2,360
Total reported debt & leases 50,672 52,259 58,313 62,323 50,841 23,388
Total Disney Shareholder’s equity 99,277 95,008 88,553 83,583 88,877 48,773
Net deferred tax (assets) liabilities2 6,587 7,727 6,560 6,959 7,492 2,975
Allowance for credit losses3 115 158 170 426 295 192
Deferred revenues4 6,545 6,458 4,648 4,201 4,669
Restructuring reserves5 50 357 676
Equity equivalents6 13,247 14,343 11,428 11,943 13,132 3,167
Accumulated other comprehensive (income) loss, net of tax7 3,292 4,119 6,440 8,322 6,617 3,097
Redeemable noncontrolling interests 9,055 9,499 9,213 9,249 8,963 1,123
Noncontrolling interests 4,680 3,871 4,458 4,680 5,012 4,059
Adjusted total Disney Shareholder’s equity 129,551 126,840 120,092 117,777 122,601 60,219
Projects in progress8 (6,285) (4,814) (4,521) (4,449) (4,264) (3,942)
Investments recorded at fair value9 (174) (308) (950) (1,057)
Invested capital 173,764 173,977 172,934 174,594 169,178 79,665

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenues.

5 Addition of restructuring reserves.

6 Addition of equity equivalents to total Disney Shareholder’s equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of projects in progress.

9 Subtraction of investments recorded at fair value.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Walt Disney Co. invested capital increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Cost of Capital

Walt Disney Co., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 172,873 172,873 ÷ 218,570 = 0.79 0.79 × 15.96% = 12.62%
Borrowings and finance lease liabilities3 41,699 41,699 ÷ 218,570 = 0.19 0.19 × 4.96% × (1 – 21.00%) = 0.75%
Operating lease liability4 3,998 3,998 ÷ 218,570 = 0.02 0.02 × 3.60% × (1 – 21.00%) = 0.05%
Total: 218,570 1.00 13.42%

Based on: 10-K (reporting date: 2023-09-30).

1 US$ in millions

2 Equity. See details »

3 Borrowings and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 172,676 172,676 ÷ 220,585 = 0.78 0.78 × 15.96% = 12.49%
Borrowings and finance lease liabilities3 44,275 44,275 ÷ 220,585 = 0.20 0.20 × 4.09% × (1 – 21.00%) = 0.65%
Operating lease liability4 3,634 3,634 ÷ 220,585 = 0.02 0.02 × 2.70% × (1 – 21.00%) = 0.04%
Total: 220,585 1.00 13.18%

Based on: 10-K (reporting date: 2022-10-01).

1 US$ in millions

2 Equity. See details »

3 Borrowings and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 275,084 275,084 ÷ 339,315 = 0.81 0.81 × 15.96% = 12.94%
Borrowings and finance lease liabilities3 60,611 60,611 ÷ 339,315 = 0.18 0.18 × 3.04% × (1 – 21.00%) = 0.43%
Operating lease liability4 3,620 3,620 ÷ 339,315 = 0.01 0.01 × 2.40% × (1 – 21.00%) = 0.02%
Total: 339,315 1.00 13.39%

Based on: 10-K (reporting date: 2021-10-02).

1 US$ in millions

2 Equity. See details »

3 Borrowings and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 269,925 269,925 ÷ 338,438 = 0.80 0.80 × 15.96% = 12.73%
Borrowings and finance lease liabilities3 65,126 65,126 ÷ 338,438 = 0.19 0.19 × 3.06% × (1 – 21.00%) = 0.47%
Operating lease liability4 3,387 3,387 ÷ 338,438 = 0.01 0.01 × 2.50% × (1 – 21.00%) = 0.02%
Total: 338,438 1.00 13.21%

Based on: 10-K (reporting date: 2020-10-03).

1 US$ in millions

2 Equity. See details »

3 Borrowings and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 264,826 264,826 ÷ 318,639 = 0.83 0.83 × 15.96% = 13.26%
Borrowings and finance lease liabilities3 50,109 50,109 ÷ 318,639 = 0.16 0.16 × 3.30% × (1 – 21.00%) = 0.41%
Operating lease liability4 3,704 3,704 ÷ 318,639 = 0.01 0.01 × 10.91% × (1 – 21.00%) = 0.10%
Total: 318,639 1.00 13.77%

Based on: 10-K (reporting date: 2019-09-28).

1 US$ in millions

2 Equity. See details »

3 Borrowings and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 168,264 168,264 ÷ 191,775 = 0.88 0.88 × 15.96% = 14.00%
Borrowings and finance lease liabilities3 21,151 21,151 ÷ 191,775 = 0.11 0.11 × 3.38% × (1 – 24.50%) = 0.28%
Operating lease liability4 2,360 2,360 ÷ 191,775 = 0.01 0.01 × 11.12% × (1 – 24.50%) = 0.10%
Total: 191,775 1.00 14.39%

Based on: 10-K (reporting date: 2018-09-29).

1 US$ in millions

2 Equity. See details »

3 Borrowings and finance lease liabilities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Walt Disney Co., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018
Selected Financial Data (US$ in millions)
Economic profit1 (19,918) (16,226) (20,937) (25,124) (7,093) 741
Invested capital2 173,764 173,977 172,934 174,594 169,178 79,665
Performance Ratio
Economic spread ratio3 -11.46% -9.33% -12.11% -14.39% -4.19% 0.93%
Benchmarks
Economic Spread Ratio, Competitors4
Alphabet Inc. 19.08% 15.99% 38.27% 19.51% 18.57%
Charter Communications Inc. -0.47% -0.74% -1.77% -4.04% -5.72%
Comcast Corp. -2.30% -6.77% -1.75% -3.41% -1.35%
Meta Platforms Inc. 12.39% 6.02% 28.47% 19.68% 12.79%
Netflix Inc. 0.20% -1.07% 3.25% -2.14% -3.96%

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -19,918 ÷ 173,764 = -11.46%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Walt Disney Co. economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Economic Profit Margin

Walt Disney Co., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018
Selected Financial Data (US$ in millions)
Economic profit1 (19,918) (16,226) (20,937) (25,124) (7,093) 741
 
Revenues 88,898 82,722 67,418 65,388 69,570 59,434
Add: Increase (decrease) in deferred revenues 87 1,810 447 (468) 1,134
Adjusted revenues 88,985 84,532 67,865 64,920 70,704 59,434
Performance Ratio
Economic profit margin2 -22.38% -19.20% -30.85% -38.70% -10.03% 1.25%
Benchmarks
Economic Profit Margin, Competitors3
Alphabet Inc. 11.76% 9.85% 21.95% 13.07% 11.53%
Charter Communications Inc. -1.16% -1.80% -4.48% -11.19% -17.19%
Comcast Corp. -3.98% -11.98% -3.44% -7.35% -2.69%
Meta Platforms Inc. 12.96% 5.26% 22.37% 18.51% 11.83%
Netflix Inc. 0.23% -1.28% 3.80% -2.53% -4.71%

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -19,918 ÷ 88,985 = -22.38%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Walt Disney Co. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.