Netflix vs. Disney: Which Streaming Giant is a Stronger Stock Pick?

In the fierce battleground of streaming entertainment, Netflix NFLX and Disney DIS stand as towering titans, each wielding unique strengths in their quest for subscriber dominance. Netflix, the original streaming pioneer, boasts massive global subscribers, impressive original content production capabilities, and a proven track record of innovation. Disney+, though a later entrant, leverages Disney's unparalleled content library and powerful franchises spanning from Marvel to Star Wars to Pixar.As both companies jockey for position in an increasingly competitive landscape, investors face a compelling question: Which streaming giant offers the superior investment opportunity? Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.The Case for NFLX StockNetflix has firmly established itself as the undisputed streaming market leader, demonstrating remarkable growth momentum in fourth-quarter 2024 with 18.91 million paid net additions — the largest quarterly gain in company history. This surge propelled its total subscriber base to 301.63 million, highlighting Netflix's continued appeal and expansion capabilities even in a maturing market.The company's financial performance underscores this strength, with fourth-quarter revenue increasing 16% year over year and operating income surging 52%. For full-year 2024, Netflix achieved significant milestones, including 16% revenue growth, 27% operating margin (six percentage points higher than 2023), and operating income exceeding $10 billion for the first time in its history. The company's strong cash position, with free cash flow of approximately $7 billion in 2024, provides substantial flexibility for content investments and shareholder returns.Netflix's content strategy continues to deliver hits across multiple formats. Major successes include Squid Game Season 2, which is on track to become one of its most-watched original series, along with its expansion into live programming with events like the Jake Paul vs. Mike Tyson fight, which became the most-streamed sporting event ever. Looking ahead, the return of flagship series like Wednesday and Stranger Things in 2025 positions Netflix for continued engagement strength.Despite these impressive fundamentals, challenges remain. While the company's advertising revenues are poised to double in 2025 and operating margins continue improving to a targeted 29%, much of this growth appears priced in. Currency headwinds, intensifying premium competition, and uncertain subscriber retention following recent price increases suggest waiting for a more attractive entry point. The return of flagship shows and live sports initiatives creates long-term value, but patience may reward investors seeking better risk-reward dynamics.For 2025, Netflix forecasts revenues of $43.5-$44.5 billion. The Zacks Consensus Estimate for 2025 revenues is pegged at $44.42 billion, indicating 13.89% year-over-year growth. With the Zacks Consensus Estimate for 2025 earnings indicating a downward revision of 0.3% over the past 30 days to $24.51 per share, the market appears to be cautious about Netflix's growth trajectory.Image Source: Zacks Investment ResearchFind the latest earnings estimates and surprises on Zacks Earnings Calendar.The Case for DIS StockDisney offers investors a compelling diversified entertainment powerhouse featuring multiple complementary business segments. While its streaming service Disney+ reached 178 million subscribers when combined with Hulu, the company's strength extends far beyond digital platforms to include theatrical releases, theme parks, linear television, and merchandising.DIS' theatrical business demonstrated remarkable strength in 2024, becoming the first studio post-pandemic to surpass $5 billion worldwide box office, fueled by hits like Inside Out 2, Deadpool & Wolverine and Moana 2. This box office success creates valuable content that eventually flows to Disney+, demonstrating the company's effective content monetization across multiple windows. Looking ahead, Disney has an impressive slate of theatrical releases, including Captain America: Brave New World, Pixar's Elio and new installments in the Fantastic Four and Avatar franchises.The company's streaming strategy is evolving impressively, with Disney+ adding an ESPN tile providing bundle subscribers access to ESPN+ sports content. This integration represents a significant differentiator from Netflix, as live sports remain a powerful audience draw. Additionally, Disney+ is enhancing its platform with features like Streams, including a newly announced 24/7 Simpsons channel, that mimic the traditional TV experience many viewers still prefer.Disney's theme park business continues to demonstrate resilience and growth potential, with plans for significant expansions, including Disneyland's 70th anniversary celebration. This diversified revenue model provides Disney with multiple growth levers and potential upside that pure-play streaming companies lack, while helping fund content creation across its ecosystem.The Zacks Consensus Estimate projects fiscal 2025 revenues of $94.63 billion, indicating 3.58% year-over-year growth, with earnings expected to increase 10.26% to $5.48 per share. These projections have remained unchanged over the past 30 days.Image Source: Zacks Investment ResearchStock Valuation and Price Performance ComparisonWhen comparing these e-commerce giants through a valuation lens, Disney emerges with several advantages. Disney's forward P/S ratio of 1.57X is significantly more attractive than Amazon's 8.68X. This indicates that Disney offers better relative value for investors seeking exposure in the streaming space, especially considering its diverse business model and valuable intellectual property.DIS Stock Valuation More Attractive Than NFLXImage Source: Zacks Investment ResearchFrom a price performance perspective, Netflix has been the clear winner recently. Its stock has surged 50.8% over the past year, dramatically outperforming Disney and the broader market. Looking longer-term, Netflix's five-year return of 112.1% and 10-year return of 1,040.6% demonstrate its remarkable ability to deliver shareholder value. However, this exceptional performance may limit further upside compared to Disney's potential for multiple expansion.1-Year Stock Price PerformanceImage Source: Zacks Investment ResearchWhile Netflix currently enjoys stronger operating margins at 27% versus Disney's streaming segment still working toward profitability, Disney's comprehensive entertainment ecosystem offers unique advantages for long-term value creation that aren't fully reflected in its current share price.Disney Edges Out Netflix for Investor OpportunityWhile Netflix demonstrates impressive operational execution with record subscriber growth and profitability, Disney presents the more compelling investment case due to its significantly more attractive valuation, diverse revenue streams, and untapped potential in its streaming business. DIS' unmatched content franchises, strategic sports integration, theme park expansion, and theatrical dominance provide multiple avenues for growth beyond streaming. With a forward P/S ratio just one-fifth of Netflix's, Disney offers substantially better upside potential as it continues to refine its streaming strategy while leveraging its broader entertainment ecosystem. For investors seeking long-term value in the streaming wars, Disney represents the stronger opportunity. DIS and NFLX carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks