Disney shares are heading for almost a 40% drop this year.

Walt Disney ( DIS -1.40%) has lost a lot of its magic for investors this year. The stock is heading for nearly a 40% loss. The company missed analysts’ sales and profit estimates in the latest earnings report. Demand is growing for the entertainment giant’s offerings — but costs are climbing too.

It’s clear the company needs a plan to manage today’s challenges and spur long-term growth. And in a surprise move a few days ago, Disney offered its solution. The company brought back longtime chief executive officer Bob Iger — only months after renewing current CEO Bob Chapek’s contract.

Does this switch make Disney stock a buy? Disney’s brand strength

First, let’s look at the good news in Disney’s recent earnings report. There’s no doubt about it: Disney’s got brand strength. Fans still love going to Disney’s parks. Revenue in the parks, experiences, and products business climbed in the double digits in the fourth quarter and in the fiscal year. And guest per-capita spending in the quarter increased almost 40% from pre-pandemic days.

Disney’s streaming services are also gaining more subscribers. Direct-to-consumer, which includes streaming service Disney+, added about 57 million subscribers in the fiscal year to total more than 235 million.

At the same time, this growth is costing Disney in the near term. Higher losses at Disney+ and ESPN+ and lower results at Hulu weighed on earnings. Chapek confirmed the goal of Disney+ profitability in fiscal 2024 — but said that could change depending on what happens with the economy. Disney’s content sales and licensing business also saw revenue declines.

In the earnings call, CFO Christine McCarthy said the company is studying its cost base and aims to identify “meaningful efficiencies.”

That was earlier this month. Then, over the weekend, Disney announced the return of Iger and Chapek’s departure. Managing during a difficult time

Before considering what this move means for Disney, it’s important to note that Chapek took the reins at a particularly difficult time. Right as the pandemic began. Disney closed its parks around the world — and saw its biggest source of revenue drop. Shepherding Disney through that time and into the later stages of the pandemic wasn’t the easiest job.

That said, during today’s challenging period, if anyone can set Disney on the right path, it’s probably Iger . First, he knows Disney well. He became part of the company’s senior management team in 1996. Then he took on the CEO role in 2005 and remained at the helm until 2020.

During that time, Disney’s market value grew more than 350% to $257 billion. Under Iger’s leadership, Disney acquired Pixar, Marvel, Lucasfilm, and 21st Century Fox. Other successes during his tenure include the releases of movies like Frozen and Marvel’s Black Panther , as well as the launch of streaming service Disney+.

Throughout his time as CEO, he grew earnings in the triple digits. Free cash flow and return on invested capital generally gained over the period. And Disney’s share price increased more than 400%.

Iger signed on for a period of two years to lay out a plan for Disney, then help choose a successor. Is Disney a buy now?

Does all of this make Disney a buy? Today, Disney trades at 23 times forward earnings estimates. That’s down from more than 40 in January. That looks cheap, considering Disney’s potential to grow earnings — if Iger can lower costs across business units, spur growth, and bring Disney+ to profitability.

Can he do it? As mentioned, Iger has the track record — right there at Disney, in this role — to set the company on the right path. And CNN reports Iger already is making moves. He asked executives to work on “a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs.”

So, there’s reason to be optimistic. Disney has the advantage of brand strength and ongoing demand for its parks, movies, and entertainment offerings.

All of this means Disney is a buy today. And in the coming quarters, there’s reason to believe the magic will come back to this entertainment story. Should you invest $1,000 in Walt Disney right now?

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