Why Is Disney Stock So Cheap?

Andrew Willis: After hearing that Disney was reinstating Bob Iger as CEO, it all made sense when I learned that he had emphasized the important role of streaming at Disney. After all, we expect this segment to grow from 120 million subscribers in 2020 to 300 million by 2026, giving the likes of Netflix NFLX and Apple AAPL a run for their money.

The market seems to have realized the potential of the company focusing on streaming strategies, with the stock rallying in the wake of the announcement of the "Bob swap." But after Bob Chapek's reorganization and preparation for the evolving media landscape, we think the stock still has some ways to go to reach its fair value estimate.

Having to transform from video cassettes and DVDs to the very fast-moving world of streaming requires streamlined decision-making processes, and Chapek helped line that up. Now, Iger can use his relationships to strengthen the "softer" side of the business, as senior equity analyst Neil Macker notes, which includes Hollywood stars--and perhaps most importantly, investors.

For Morningstar, I'm Andrew Willis.

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