Will Disney Stock Really Lose to the Market for the Fourth Year in a Row?

It's been an up and down year for Walt Disney (NYSE: DIS) investors. Shares of the media giant got off to a hot start in 2024. At one point in March it was trading 37% higher, making it the best year-to-date performer among the 30 components of the Dow Jones Industrial Average (DJINDICES: ^DJI) . It's not wearing that crown anymore.

After three consecutive years of falling short against the market, it seemed as if the House of Mouse was finally going to pay off for its shareholders. The stock chart hasn't been as kind at this end of its successful proxy battle. Disney stock enters this week trading just 6% higher, losing again to all three of the major market averages.

It doesn't have to stay that way. Let's look at some of the reasons why Disney shares can get back on track in the second half of this year.

Happily ever after

There are a lot of moving parts when it comes to Disney, and they aren't always moving in the right direction. Analysts see revenue rising just 3% for this fiscal year ending in September, accelerating to 5% in fiscal 2025. It's a different story on the bottom line, as Wall Street pros are targeting a 26% jump in profitability this year, followed by another year of double-digit gains.

Many of the leading factors that dogged Disney early in the pandemic are now fading in the rearview mirror. Its streaming business -- helmed by Disney+ -- surprised investors with an operating profit in the latest quarter. After a couple of years of 10-figure operating losses for its direct-to-consumer streaming business, Disney sees it turning a profit again in the fiscal fourth quarter and building on that in fiscal 2025.

Another thing holding Disney back is its recent stumbles at the box office. Well, Inside Out 2 recently became the first theatrical release by any studio to top $1 billion in worldwide ticket sales since Barbie 's blowout showing last summer. With a strong slate of releases coming out in the second half of the calendar year -- starting with Marvel's Deadpool & Wolverine this weekend -- the narrative of Disney's box office failures is ready to have a Hollywood ending.

Image source: Disney.

An August to remember

The proxy battle that came to an end at April's shareholder meeting was more than a little interesting . Disney found itself offering up a lot of pixie dust in February's fiscal first-quarter update to prevent activists from gaining momentum. Did it really need to announce a 50% dividend hike that wasn't being paid out for another five months?

Disney didn't leave itself with any dry powder to impress the market in its May update, but now investors can start to circle the morning of Aug. 7 on the calendar. It's when Disney will post results for its fiscal third quarter. Expectations aren't high, and that was Disney's handiwork. It told investors in May that the bottom line for its streaming business would have its challenges in the June quarter before returning to profitability in the following report. It pointed out how its theme parks would also face difficult year-over-year comparisons as a result of holiday timings and the prior year's milestone events on both coasts. It should also have some initial data on the rebranding and upgrade of its Lightning Lane Multi Pass premium queue service that rolls out later this week.

August won't be about looking back. It will be about looking ahead. Theme park fans can look forward to the D23 event it will host later in the week following its financial update. Disney is widely expected to announce new experiences coming to its popular gated attractions. Another big movie will roll out a week later, as Alien: Romulus looks to breathe new life into the iconic sci-fi horror franchise.

With Disney shares buckling back below $100 it's been a laggard in recent months. It's a stark contrast to the general market's rally, but the recipe is in place for Disney to resume its role of leadership among entertainment stocks . It's time to start cooking again.

Rick Munarriz has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool has a disclosure policy .