“`html
Walt Disney Company Set to Release Q4 Earnings: What to Watch For
The Walt Disney Company DIS is scheduled to announce its fourth-quarter fiscal 2024 results on November 14.
The Zacks Consensus Estimate predicts revenues of $22.59 billion, reflecting a 6.37% increase compared to the same quarter last year.
For earnings, the consensus estimate has declined by one cent to $1.09 per share over the last 30 days, which still indicates a notable growth of 32.93% year-over-year.
Image Source: Zacks Investment Research
Discover updated EPS estimates and surprises on the Zacks Earnings Calendar.
In the previous quarter, Disney achieved an earnings surprise of 15.83%. The company has surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, averaging a surprise of 18.01%.
The Walt Disney Company Price and EPS Surprise
The Walt Disney Company price-eps-surprise | The Walt Disney Company Quote
Earnings Forecasts
Currently, our model does not definitively indicate an earnings beat for Disney this quarter. For an earnings beat, a positive Earnings ESP combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) is generally beneficial. At this moment, DIS has an Earnings ESP of -1.63% and a Zacks Rank #3.
Drivers Behind Expected Results
As the media industry evolves from traditional linear TV to streaming, Disney is well-poised to adapt. With reliable U.S. streaming services like Disney+ and Hulu, alongside ESPN+, the company has developed a solid framework for success.
A key strength for Disney is its bundling strategy. This approach combines streaming services into a single package, which is expected to enhance average revenue per account while also reducing customer turnover.
For the fourth quarter, Disney anticipates slight growth in Disney+ Core subscribers. They foresee improved profitability from their streaming services, with both Entertainment DTC and ESPN+ contributing positively this quarter.
On the other hand, DIS might experience continued setbacks in Linear TV revenues, potentially impacting Media and Entertainment Distribution revenue. According to our estimations, Entertainment revenues (including Linear Networks, Direct-to-Consumer, and Content Sales/Licensing) are projected at $9.44 billion, marking a 0.8% decline year-over-year.
Disney’s unmatched portfolio of Intellectual Property (IP) remains a major advantage. Owning popular franchises such as Marvel, Star Wars, and beloved characters like Mickey Mouse not only connects audiences to their projects but also mitigates investment risks.
This extensive IP portfolio is crucial for their studio operations and supports their entire business ecosystem, including streaming, linear networks, and the profitable Parks, Experiences & Consumer Products segment.
In the Experiences segment, Disney acknowledges that the demand dip seen in domestic businesses during the third quarter could affect performance in subsequent quarters. They are closely monitoring visitor attendance and spending while managing costs effectively. Expected operating income for the Experiences segment is projected to decline by mid-single digits compared to the previous year, due to various factors including changes in consumer travel patterns related to the Olympics and cyclical downturns in China.
Investors should keep an eye on significant metrics such as park attendance, per-capita spending, and any announcements regarding international expansion, as this segment may play a key role in Disney’s growth trajectory.
Our estimate for the Experiences segment revenues stands at $9.13 billion, reflecting a 12% year-over-year increase.
Mainly fueled by high demand at Disney Cruise Line, results for the fiscal fourth quarter are likely to encompass expenses incurred before the launch of Disney Adventure and Disney Treasure.
Stock Performance & Valuation Analysis
Year-to-date, DIS shares have returned 11.7%, slightly outperforming the broader Zacks Consumer Discretionary sector, which grew by 10%. Disney operates in a highly competitive streaming environment, facing rivals such as Amazon AMZN with Amazon Prime Video and Netflix NFLX, along with Apple, Comcast CMCSA’s Peacock, and HBO Max increasing their presence.
Performance Overview for the Year
Image Source: Zacks Investment Research
When examining valuation, Disney trades at a forward 12-month P/E of 19.53X, surpassing the Zacks Media Conglomerates industry average of 19.11X, indicating a premium valuation. The company’s debt totals $47.5 billion, which is considerably higher compared to its cash, cash equivalents, and marketable investments amounting to $5.95 billion.
P/E Ratio Suggests High Valuation for DIS
Image Source: Zacks Investment Research
Investment Insights: Weighing Risks and Rewards
Disney remains a significant player in the investment arena, historically regarded as a blue-chip stock and widely held in various portfolios. DIS’s strengths lie in its globally recognized brand and a diverse array of intellectual properties covering movies, television shows, theme parks, and merchandise. This varied portfolio has traditionally given Disney a unique advantage in captivating audiences worldwide and fostering long-term engagement.
“`
Disney Faces Challenges Amid Changing Entertainment Landscape
Disney has long been a strong player in generating consistent revenue streams. However, recent years have presented significant challenges. These include disruptions in traditional media, the pandemic’s impact on theme parks, and evolving consumer preferences. Investors are beginning to rethink Disney’s attractiveness, pondering whether this iconic company can sustain its previous charm in an increasingly competitive and rapidly changing entertainment sector.
Final Thought
Despite these challenges, Disney remains a diversified media and entertainment leader with a powerful brand and invaluable intellectual properties. Its theme parks and resorts still serve as key revenue sources, with growth potential especially in emerging Asian markets. However, the rising trend of cord-cutting is exerting pressure on its operations, which could outweigh benefits from other areas of the business.
For investors contemplating Disney stock in the fourth quarter of fiscal 2024, a cautious approach may be wise. Those with shorter investment horizons might want to hold off for a more favorable entry point, as uncertainty continues to loom over the company’s growth prospects and competitive pressures, even as the enduring strength of the Disney brand persists.
5 Stocks Targeting 100% Growth
These five stocks have been handpicked by Zacks experts as top contenders expected to rise by 100% or more in 2024. While not every selection proves successful, past recommendations have achieved remarkable returns of +143.0%, +175.9%, +498.3%, and +673.0%.
Many of the stocks profiled are currently flying under Wall Street’s radar, presenting a unique opportunity for early investment.
Discover These 5 Potential Home Runs >>
Interested in the latest picks from Zacks Investment Research? You can download the report “5 Stocks Set to Double” today at no cost.
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Comcast Corporation (CMCSA): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
The Walt Disney Company (DIS): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
