Can Disney Stock Finally Beat the Market in 2025?

It's been a good year for Walt Disney (NYSE: DIS) investors. Shares of the media giant are trading 24% higher in 2024 heading into the final full trading week of the year. This happens to match the 24% increase for the S&P 500. If the media giant can edge out the market in the next few days it will be the first time since 2020 that Disney stock beats the S&P 500.

Naturally investors don't want to simply be a pace car for the market, much less fall well short of the S&P 500 the way they have in the three previous years. Can Disney outperform the market in 2025 for the first time in five years? Let's take a closer look.

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Getting back on track

Instead of closing out 2024 with a bang, Disney is stumbling on its way to the finish line. Last week, Disney's ABC agreed to pay $15 million to settle a defamation lawsuit with President-elect Donald Trump. This past weekend, Disney disappointed at the local multiplex after a stellar recovery in 2024.

Mufasa: The Lion King collected just $35 million in domestic ticket sales over the weekend, and $122 million worldwide. Industry predictions were eyeing $50 million domestically and $180 million globally in box office receipts. Adding insult to injury, the big-budget entry in the iconic Lion King franchise fell woefully short in the U.S. to the debut of Sonic the Hedgedog 3 and its $62 million take from stateside audiences.

A couple of rungs lower, Disney's Moana 2 -- after three weekends at the top domestically -- fell to fourth place. It was overtaken by Wicked for the bronze, defying gravity, if you will, as it opened a week earlier than the sequel to 2016's Moana. It bears pointing out that Wicked doesn't have the same international appeal of Moana 2, as the latter has more than doubled box office receipts outside of the U.S. market.

Moana 2 is going to be a big winner for Disney's bottom line. It has now topped $790 million globally, on its way to become the third Disney theatrical release of 2024 to top $1 billion following the summertime successes of Inside Out 2 and Deadpool & Wolverine. None of Disney's studio releases in 2023 crossed that mark. Mufasa is now highly unlikely to join this year's three big winners. It will be challenging just to avoid a charge in the new fiscal year for the estimated $200 million production.

The ABC settlement and lackluster Mufasa premiere are small hiccups for a company that has won more than lost in 2024. Disney is well positioned to continue roaring as fiscal 2025 plays out.

Image source: Disney.

Be prepared

This will be Disney's first year of double-digit gains since 2020. The shares would go on to experience back-to-back years of double-digit-percentage declines before squeezing out a 4% increase in 2023. Building on the momentum of 2024 is essential.

There will be obstacles in 2025. Disney's domestic theme parks have stalled in recent quarters. It now faces an "epic" challenge as rival Comcast opens Epic Universe in Walt Disney World's backyard in May. Disney's linear networks segment should continue to fade in popularity as more consumers turn to streaming services. An iffy economy or global uneasiness could rattle most of Disney's operations.

The positives still outweigh the negatives. After back-to-back quarters of positive operating profits, Disney+ and the rest of the media stock's streaming platforms have the leverage and content to dramatically ramp up on the bottom line. Disneyland will kick off the original gated attraction turning 70 with a celebration in May that will last for more than a year.

Disney's studio will have plenty of potential blockbusters. The 2025 release slate includes fresh Marvel releases in the Captain America and The Fantastic Four franchises. On the animated front, Zootopia 2 and Pixar's Elio should fare well. There's also a highly anticipated live action spin on Lilo & Stitch. The final Disney cinematic release of the 2025 calendar year will be Avatar: Fire and Ash. The previous film in that franchise -- 2022's Avatar: The Way of Water -- is the world's highest-grossing film since the pandemic.

Analysts have been inching their profit targets higher in recent weeks. They now see the House of Mouse posting a 12% increase in earnings per share on a 5% move higher in revenue for all of fiscal 2025. Disney's dividend has returned and has already been hiked twice. The board recently updated investors with plans to announce CEO Bob Iger's successor by early 2026. The pieces are in place for Disney to take the wheel of market leadership in 2025.

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