HomeMarket NewsDisneyโ€™s Profits Soar as Cost-Cutting Drives Growth

Disneyโ€™s Profits Soar as Cost-Cutting Drives Growth

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On a positive note for investors, Walt Disney (NYSE:DIS) experienced a 2% rise in early postmarket trading on Wednesday, following the release of its fiscal fourth-quarter earnings report. The report revealed that the company surpassed profit expectations, thanks to accelerated cost-cutting measures. Disney also demonstrated better-than-expected growth in streaming subscribers, further adding to the positive investor sentiment.

The companyโ€™s revenues expanded by 5% to reach $21.24 billion, although this figure fell slightly short of the consensus estimate of $21.4 billion. The growth was primarily driven by the companyโ€™s Parks and Experiences unit.

This positive financial trajectory is attributed to Disney being on track to achieve $7.5 billion in annualized cost savings, surpassing the expected target by $2 billion. In addition, the company saw adjusted earnings per share surge to $0.82 from the $0.30 figure reported in the previous yearโ€™s quarterly results, surpassing expectations of $0.71. Disney CEO Bob Iger expressed optimism about the companyโ€™s improving financial situation, stating, โ€œWhile we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again.โ€

Looking ahead, Iger highlighted four key opportunities that will be central to Disneyโ€™s future success. These include achieving significant and sustained profitability in the streaming business, transforming ESPN into a leading digital sports platform, enhancing the output and economics of the film studios, and driving growth in the parks and experiences business.

On the streaming front, Disney+ subscribers have surpassed 150 million, specifically reaching 150.2 million, exceeding the estimated figure of just over 147 million. The service also gained nearly 7 million core subscribers. However, total Hulu subscriptions remained steady at 48.5 million, slightly below expectations.

Disney announced its continued expectations for the combined streaming businesses to achieve profitability in the fourth quarter of 2024, with Iger emphasizing that progress may appear non-linear from quarter to quarter. The companyโ€™s revenues by segment included Entertainment at $9.52 billion (a 2% increase), Sports at $3.91 billion (stable growth), and Experiences at $8.16 billion (a remarkable 13% growth). Operating income by segment revealed Entertainment at $236 million (compared to a loss of $608 million in the previous year), Sports at $981 million (a 14% increase), and Experiences at $1.76 billion (a 31% surge).

Investors should keep an eye out for the upcoming conference call scheduled for 4:30 p.m., which may provide further insights into Disneyโ€™s future plans and strategies.

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