Bob Iger Built Disney for Hollywood. Josh D’Amaro Is Building It for Main Street. Does D’Amaro’s Vision Makes Disney a Buy Down 49% From Its All-Time High?

Many consumer tech companies are spending billions, tens of billions, and — in a handful of cases — hundreds of billions on artificial intelligence (AI) this year. Disney (DIS +0.49%) isn’t afraid of cutting big checks to bankroll its future, but AI isn’t the top priority.

It’s been two years since Disney stunned the market by committing to $60 billion in capital expenditures for its experiences business, led by its theme parks and cruise line. Sure, this will be spread out over 10 years. It’s still a substantial wager on a very important segment for the House of Mouse. It’s a lot of money, and with Josh D’Amaro stepping up as CEO earlier this year, this should be a very exciting week on that front.

Image source: Disney.

A wish is a dream your heart makes

Former CEO Bob Iger — who led Disney from 2005 to 2020 before returning to the helm two years later — handed the gig to D’Amaro in March. Iger never neglected the theme parks. International expansion and updated guest experiences served Disney’s empire of gated attractions well.

However, Iger came from ABC. He served all of Disney well when he made it to the corner office, but there is no denying that the studio segment was his priority. The three biggest deals he orchestrated in his tenure — Pixar, Lucasfilm, and 21st Century Fox — were all media businesses. For a business built on princesses, content always seemed to be king in the eyes of Iger.

Iger was CEO when Disney announced the $60 billion shopping spree. Half of it would go to improving its theme parks. Less than a third of it would go to improving the infrastructure of its experiences. The rest would go to building out its fleet of cruise ships. However, when it came time to announce details of the new experiences coming to Disney’s theme parks — two summers ago at the D23 fan expo in California — it was D’Amaro taking center stage.

Disney stock is up just 4% since D’Amaro became CEO less than five months ago. It may not seem like much, but Disney shares rose a mere 8% in the 40 months that Iger was the Big Cheese in his second run at the top. In Iger’s defense, Disney was a five-bagger in his first go-round as CEO.

Today’s Change

(0.49%) $0.51

Current Price

$103.69

Key Data Points

Market Cap

$178BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

$102.79 – $104.08

52wk Range

$92.19 – $119.78

Volume

1.5M

Avg Vol

10.6M

Gross Margin

32.19%

Dividend Yield

1.45%

Carousel of progress

D’Amaro had a strong first full quarter as CEO, as Disney announced last week. Revenue rose just 7%, but that was its strongest top-line jump in more than three years. Adjusted earnings more than doubled that clip, rising a better-than-expected 15%.

There are always plenty of moving parts when Disney is successful, but nothing is moving as well as its experiences segment these days. It accounted for 54% of Disney’s segment operating profit in its latest quarter. New cruise ships are naturally helping, but even its theme park business delivered another pleasant surprise. Its global theme parks posted a 4% increase in guests, while its two domestic resorts delivered a 3% gain. Even more impressively, per capita revenue is up 4%. Unlike rival attractions operators that saw weak guest trends and relied on heavy promotional activity, Disney saw its traffic pick up and guest wallets open wider.

Outside of the well-received financial update, D’Amaro’s first few months have been uneventful, aside from layoffs to streamline operations and last week’s announcement to ramp up its share buyback initiatives to $9 billion in repurchases this fiscal year. If you’re waiting for D’Amaro’s first true signature move, you won’t have to wait long.

D23 is back this weekend, and the experiences segment that D’Amaro is championing will again find him joined by Neil Patrick Harris on Saturday night to announce future plans for its theme parks and cruise ships. Between firming up the timeline of new attractions revealed two years ago and likely announcing some new projects, D’Amaro will be back in his element.

Disney stock has been cut nearly in half since peaking five years ago. It would have to double from here to establish new all-time highs. When that ultimately happens, you can be sure that D’Amaro’s presentation this weekend will play a starring role.