Media giant The Walt Disney Company (NYSE:DIS) is set to report fourth quarter financial results after market close Wednesday, Nov. 8.
Here's a look at the key earnings estimates, what analysts are saying, and key items for investors to watch.
Earnings Estimates: Analysts expect Disney to report fourth quarter revenue of $21.355 billion, according to data from Benzinga Pro. The revenue would be an increase from $20.15 billion in the prior year's period.
Disney has beaten revenue estimates from analysts in five of the last seven quarters.
Analysts expect Disney to report fourth quarter earnings per share of 71 cents, which could be an increase from the 30 cents reported in the prior year's period. Disney has beaten earnings per share estimates from analysts in five of the last seven quarter, with one miss and one match.
What Analysts are Saying: Analysts have been mixed on Disney heading into the fourth quarter earnings report.
The breakout of ESPN as a standalone financial metric led to new commentary from analysts, including Macquire analyst Tim Nollen.
Nollen, who has a Neutral rating and $94 price target, highlighted the strength of ESPN with the new metrics in an Oct. 24 note.
"ESPN is a growing business, with positive revenue growth vs the traditional Linear business. Affiliate revenue from Sports is declining at a modest pace vs. Linear, which could be offset by growth in subscription fees from ESPN+ and higher advertising revenue," Nollen said.
Nollen has estimates of $21.2 billion in revenue and 75 cents in earnings per share for Disney's fourth quarter.
"We expect the new Linear standalone segment to continue to decline from the loss of pay TV subs, and advertising to remain weak. We expect Disney+ subs to be flat q/q, but expect DTC losses to improve to ($288m) on lower content spending and other cost-cutting measures."
After Disney's third quarter results, Nollen said that an update on a plan for ESPN could be a catalyst for the stock.
Here's a look at other analyst ratings for Disney in the month of October:
- JPMorgan: Overweight, lowers price target from $125 to $120
- Seaport: Initiates with Buy, price target $93
- Bernstein: Initiates with Overweight, price target $103
Related Link: Disney Reports ESPN Financials
Key Items to Watch: One of the biggest key items to watch is the company's streaming business, with Disney announcing Wednesday it was agreeing to acquire the 33% stake in Hulu it did not already own from NBC Universal, a unit of Comcast Corporation (NASDAQ:CMCSA).
Disney will pay fair market value for the stake, with an estimate of $8.61 billion paid on the deal expected to close in 2024.
Investors will likely hear more from Disney on why the full ownership is important and any updates it has on boosting Hulu or its bundle deals.
An update on Disney+ subscribers will also be a key as it has been an area of weakness in recent quarters and comes as the company has launched an ad-supported plan and is planning a password sharing crackdown.
A recent report from streaming rival Netflix Inc (NASDAQ:NFLX) said the company has tripled its ad-supported plan to 15 million monthly active users since May, as shared by The Hollywood Reporter.
The report could mean that Netflix is gaining new subscribers at the cheaper price point and seeing former password sharers opt to become paying customers at the lower price point.
Netflix also announced that it will launch "binge" ads, which encourages users to keep watching content with an ad-free episode of a series after watching three episodes in a row. Netflix is also working on sponsors for individual shows, including the final season of "The Crown" and the "Squid Game" reality series.
Investors and analysts may question Disney if it is having the same success and advertising plans.
PENN Entertainment (NASDAQ:PENN) announced quarterly earnings Thursday morning and shared an update on ESPN Bet, a sports betting platform launched under a licensing agreement with Disney.
While Disney won't run the platform, it will help in customer acquisition and could comment on the anticipation of the November launch.
Another item that might be of concern to investors is the company's movie slate in 2024 and the impact of the Hollywood Strike. Disney has pushed back multiple 2024 movies to 2025 several times this year, and its lineup of blockbuster movies in 2024 is shrinking.
DIS Price Action: Disney shares trade at $83.02 versus a 52-week trading range of $78.73 to $118.18.
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