It’s hard to find a more obvious company competitive advantages yet it has underperformed the stock market over the past decade than Walt Disney (NYSE: DIS).

The entertainment giant has been a household name for almost a century and has been a leader in family entertainment since its launch snow whitehis first animated feature in 1937. Today, his empire spans ESPN, the properties he acquired from the Fox acquisition, including Hulu and Hotstar in India, six category-defining theme parks around the world, a business of cruise and vacation, a large consumer products business that licenses its intellectual property for toys, clothes and other products, and of course its core television and film business, including ABC, Disney+ and other streaming platforms.

Despite this obvious strength, the stock has faltered over the past decade due to the broader video upheaval the entertainment industry. The transition to streaming has shattered the traditional linear media ecosystem, dependent on box office revenue and cable subscription and advertising fees. Operating income began to decline in 2019 and collapsed during the pandemic and has yet to recover to its pre-pandemic peak.

However, the company showed signs of a turnaround in its fiscal fourth quarter earnings report, which ended on September 28. Shares rose as much as 12% on the news. Let’s take a look at three of the catalysts that could finally make the stock a long-term winner.

Image source: Disney.

1. Bleeding from linear media is done in principle

Like its media peers, Disney has struggled to transition from linear media to streaming. Cable revenue collapsed due to cord-cutting, and the company also lost a large chunk of ad revenue. However, the fourth quarter numbers were notable as the gains from streaming outweighed the losses from the linear average.

In its direct-to-consumer segment, which consists of non-sports streaming platforms, the company reported a profit of $253 million, compared with a loss of $420 million in the year-ago quarter. Operating income at linear networks fell from $805 million to $498 million, meaning the company has almost passed the torch from linear to streaming in terms of profits.

Total operating income in the entertainment segment increased during the fiscal year, but that was primarily because the company erased deep losses in the direct-to-consumer segment. Now, the company finally seems ready to move forward with a strategy of DTC-first, growing overall entertainment profits.

Advertising revenue has also increased as Disney increases its ad impressions, and the company appears to be following in the footsteps of Netflixwhose advertising tier has already attracted 70 million subscribers since its launch two years ago.

2. The parks business is going from strength to strength

While Disney’s core entertainment business is struggling, it continues to invest in its theme park business, which is expected to continue to grow in the coming years.

In the fourth quarter, weakness in the international segment overshadowed the strength of the domestic business, and operating income fell 6% in the quarter to $1.66 billion, although it still rose 4% for the full year to 9.3 billion dollars.

Management expects continued growth next year, calling for 6%-8% growth in operating income from the segment, weighted toward the back half of the year. Meanwhile, the company continues to invest in the business with the Disney Treasure cruise ship set to be unveiled next week and seven additional ships in development.

While park results will be choppy, they should grow steadily, especially as the company adds new ships and new theme park experiences.

3. ESPN flagship steaming could be a big winner

Disney is finally putting its flagship network ESPN on streaming next fall, and it should help bridge the gap between linear and streaming media.

ESPN has long been the company’s most valuable television property, and it bolstered its sports rights ahead of launch. CEO Bob Iger also teased some potential innovations from a streaming app, including having a personalized AI-powered SportsCenter with a personalized sports experience. In other words, the product has the potential to be the best sports entertainment experience ever made.

Iger also noted that live television, particularly live sports, is “extremely attractive” to investors and that those relationships should help turn ESPN’s flagship app into a win.

All in all, Disney looks to finally emerge from its years-long transition to streaming with profits in DTC, a growing subscriber base, strong ad adoption, a booming parks and experiences business, and excitement that will build likely around the launch of the flagship ESPN app.

Management is targeting single-digit EPS growth next year, pleasing investors, and margins should continue to expand as its streaming business grows. Disney finally seems ready to put a lost decade behind it.

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Jeremy Bowman has positions in Netflix and Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.