Disney stock (NYSE: DIS) is predicted to outperform UPS stock (NYSE: UPS) in the next three years due to its superior revenue growth and profitability. Despite facing declines in the last three years, both stocks have underperformed the broader market, with UPS experiencing a 20% drop and Disney facing a 45% decrease. Disney’s revenue growth has averaged 11% annually compared to UPS’s 3% growth, reflecting the company’s strong performance in recent years.
Disney’s revenue growth has been driven by its theme park business and streaming services, which have seen an increase in subscribers and average revenue per user. In contrast, UPS has seen slower sales growth due to weakening consumer spending, leading to a decline in average daily package volume. While UPS offers lower financial risk with a lower debt percentage and higher cash reserves, Disney is more profitable with an operating margin of 11% compared to UPS’s 10%.
Looking ahead, both Disney and UPS are expected to see mid-single-digit revenue growth over the next three years. Despite UPS having a better financial position, Disney’s superior revenue growth and profitability make it the better choice, with an estimated valuation of $137 per share reflecting over 35% upside from its current market price. In comparison, UPS is estimated to have a valuation of $163 per share, representing a 20% upside.
Despite potential headwinds from a mixed economy and weakened consumer confidence, Disney’s attractive valuation and strong demand for its streaming and theme parks businesses position it well for future growth. While Disney is expected to outperform UPS, it is important to consider how UPS’s peers fare on important metrics as well. Investors can find additional comparisons for companies across industries at Peer Comparisons.
