Disney and Earnings Expectations

 by Ray Keating

Analysis

DisneyBizJournal.com

February 2, 2023

 

The Walt Disney Company will release its next earnings report for the quarter ended in December 2022 after the stock market closes on Wednesday, February 8, 2023.

 

Whether it be Disney or another publicly traded company, people often are baffled with how a company’s stock trades after earnings are announced. So, it’s important to understand what a company’s stock price reflects or captures. I explained it this way in my book The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist: 

 

[S]tock prices reflect the level of confidence in the decisions being made for the business. This provides information to current investors, to those considering investment, and to the company board in terms of management compensation being tied to performance. Indeed, this is why top management’s compensation at a company often is tied, in part, to stock options. A stock option is the right to buy a certain number of shares of a corporation at a particular price. So, if the company performs well and the stock price rises, the options will be valuable, and vice versa if the company and stock price perform poorly.

     So, the stock price is tied to the future performance – that is, earnings or cash flow – of that particular company. Of course, all kinds of factors – both internal and external to the firm – can and will affect stock prices, and expectations regarding such factors can change, sometimes quite quickly, and will differ among market participants.

 

When talking about future earnings or cash flow, expectations naturally matter in terms of a stock’s price. So, when an earnings report, and the related earnings call with top management, align with prior market expectations, the price of the stock will be little affected. And if the earnings report “beats expectations,” the stock price will rise accordingly, and in contrast, when earnings fall short of expectations, the price will fall.

 

What do market expectations look like for Disney heading into the company’s earnings report and call next week? 

 

Zacks Equity Research reports the following in a piece at Yahoo! Finance:

 

• “This entertainment company is expected to post quarterly earnings of $0.69 per share in its upcoming report, which represents a year-over-year change of -34.9%. Revenues are expected to be $23.33 billion, up 6.9% from the year-ago quarter.”

 

• “The consensus EPS estimate for the quarter has been revised 8.3% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.”

 

• “For Disney, the Most Accurate Estimate [i.e., ‘a more recent version of the Zacks Consensus EPS estimate’ with the idea being ‘that analysts revising their estimates right before an earnings release have the latest information’] is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects… On the other hand, the stock currently carries a Zacks Rank of #4. So, this combination makes it difficult to conclusively predict that Disney will beat the consensus EPS estimate.”

 

A great deal has happened since Disney’s last earnings release on November 8, including, of course, CEO Bob Chapek being fired on November 21, with Bob Iger returning to that role.

Source: Google

 

As noted in the above chart, Disney’s stock price stood at $99.90 on November 8, sank to $84.17 on December 28, and closed at $109.39 on February 1, 2023.

 

In coming days, DisneyBizJournal will look at various other factors in play influencing Disney and its stock.

 

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? 

 

Consider books by Ray Keating…

 

• The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks at RayKeatingOnline.com or paperbacks, hardcovers and Kindle editions at Amazon.com.

 

• Cathedral: An Alliance of Saint Michael Novel. Signed paperbacks and/or paperbacks, hardcovers and the Kindle edition at Amazon. 

 

• The Pastor Stephen Grant thrillers and mysteries. The latest in the series is Persecution: A Pastor Stephen Grant Novel. Get the signed books here, or paperbacks and Kindle editions right here.

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Behind Enemy Lines: Conservative Communiques from Left-Wing New York  –  signed books  or at  Amazon.

 

•  Free Trade Rocks! 10 Points on International Trade Everyone Should Know is available at  Amazon  in paperback or for the Kindle edition, and signed books at  www.raykeatingonline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Market Expectations for Disney Earnings This Week

 by Ray Keating

News/Analysis

DisneyBizJournal.com

May 9, 2022

 

The Walt Disney Company will present second quarter earnings after the close of trading on Wednesday, May 11.

What is the market looking at and expecting?

 

CNBC noted that while investors are focused on streaming, that is, namely, Disney+, the advice was that theme park performance should not be ignored. It was reported:

 

Disney’s parks have rebounded significantly. The division, which also includes Disney experiences and consumer products, saw revenues top $7.2 billion during the fiscal first quarter, double the $3.6 billion generated in the prior-year quarter. The segment saw operating results jump to $2.5 billion compared to a loss of $100 million in the same period last year.

 

The company said in February that its domestic parks have yet to see a significant return from international travelers, which prepandemic accounted for 18% to 20% of guests. Additionally, not all of its international parks have been open full-time during the last quarter. While Paris Disneyland is celebrating its 30th anniversary, Shanghai Disneyland closed its gates temporarily due to local Covid spikes.

 

Technology and investments coming on line at the parks received attention in the piece.

 

Meanwhile, a Zacks Equity Research report at Yahoo Finance zeroed in on market expectations in terms of revenue and earnings. Key points:

 

The Zacks Consensus Estimate for earnings has moved down 1.6% to $1.20 per share over the past 30 days, indicating an increase of 51.9% year over year. The consensus mark for revenues is pegged at $20.25 billion, suggesting growth of 29.73% from the year-ago quarter’s reported figure. The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing in one, the average surprise being 67.82%...

 

The consensus mark number of paid subscribers at Disney+ is currently pegged at 135.2 million, suggesting 4.2% growth sequentially and a 30.5% rise year over year.

 

In addition, a few points from a Seeking Alpha analysis warrant noting:

 

• “Although every quarter is important for a company, it would only be appropriate to say that there is more at stake this quarter than in most typical quarters. This is because there is a significant amount of pessimism surrounding the company and its prospects moving forward. Investors are worried about a slowdown in streaming and they are concerned about the impact of continued shutdowns at some of the company's parks across the world in response to continued COVID infection rates. Though these are legitimate concerns, the overall picture for the company would likely be appealing for the long haul.”

 

• “As of the end of its latest quarter, The Walt Disney Company had 129.8 million subscribers on Disney+. Though this is impressive, investors are banking on the company achieving the 230 million to 260 million global subscribers that the company was forecasting it would have by the end of 2024. In order to reach the low end of that range, the business would need to add an average of about 9.1 million subscribers each quarter between now and then. So far, that doesn't look to be too much of a problem. In the latest quarter alone, the number of subscribers the company had was up by 11.7 million compared to what the company had just one quarter earlier.”

 

• Even with Shanghai Disney remaining closed and the Hong Kong park only recently reopening, “there is the potential for the Parks & Experiences portion of The Walt Disney Company to perform well.”

 

• “…some investors may point to the political issues the company is having in Florida. But I see that as more of a sideshow that should have a limited impact, if any, on the company.”

 

Finally, Kiplinger offers this outlook: “And in addition to direct-to-consumer subscriber growth across Disney+, Hulu and ESPN+, which will help DIS stock outperform its peers, BofA Global Research analyst Jessica Reif Ehrlich says the company's theme parks are on the upswing. ‘Despite achieving near record results in its fiscal first quarter, international visitors still represent a minimal percentage of total attendance, hotel room occupancy remains well below peak levels as all hotels have not been reopened yet, cruise ship capacity remains below pre-pandemic peaks and parks are still operating below peak capacity levels,’ Reif writes in a note to clients. ‘These should all be additional tailwinds over the next 18-24 months.’”

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Two great ways to pre-order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks here and the Kindle edition here. 

 

Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks here, and paperbacks, hardcovers and Kindle editions here.  

 

Get all of Ray Keating Pastor Stephen Grant thrillers and mysteries in paperback and for the Kindle at Amazon.com and signed books at www.RayKeatingOnline.com. 

 

Get more out of the rest of 2022 with The Disney Planner 2022: The TO DO List Solution! It combines a simple, powerful system for getting things done with encouragement and fun for Disney fans, including those who love Mickey, Marvel, Star Wars, Indiana Jones, Pixar, princesses and more. Also, “The Disney Planner 2022: The TO DO List Solution” comes with a handy spiral binding for easy use. It’s on sale and shipping is always free!

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.