Walt Disney is set to release its quarterly earnings before the market opens on Wednesday, followed by an investor conference call at 8:30 AM Eastern Time. Investors will closely monitor the trajectory of the company's streaming and theme park businesses, along with further updates on new CEO Josh D’Amaro's growth strategy. This comes less than five months after D’Amaro succeeded Bob Iger in the role.
A review of the prior quarter (fiscal 2026 second quarter) shows that Disney reported results on May 6 that exceeded expectations across the board. Revenue was $25.17 billion, up 7% year-over-year and above the market consensus of approximately $24.85 billion. Adjusted earnings per share came in at $1.57, an 8% increase and above the forecast of about $1.50. Total segment operating profit reached $4.6 billion, a 4% gain.
By segment, the entertainment business generated $11.72 billion in revenue (+10%), with operating profit rising 6%. Within this, entertainment streaming, including Disney+ and Hulu SVOD, was a standout, posting $5.49 billion in revenue (+13%) and an 88% surge in operating profit to $582 million. The operating margin for streaming surpassed 10% for the first time, reaching 10.6%. The company has stopped disclosing specific subscriber numbers, focusing instead on revenue and profitability. Advertising revenue also grew by double digits.
The sports segment, led by ESPN, reported $4.61 billion in revenue (+2%), but operating profit fell 5% to $652 million, primarily due to higher programming costs. ESPN's direct-to-consumer initiative continued to advance, with digital subscription revenue partially offsetting linear TV subscriber losses.
The experiences segment, encompassing theme parks and cruise lines, posted $9.49 billion in revenue (+7%, a second-quarter record), with operating profit rising 5% to about $2.62 billion. Domestic theme park attendance dipped 1%, but per-capita spending increased 5% across tickets, dining, and merchandise. Global visitors, including those at international parks and on cruises, grew by over 2%. The cruise business benefited from the launch of new ships.
Guidance provided at the time included: third-quarter total segment operating profit of approximately $5.3 billion; adjusted earnings per share growth of about 12% for fiscal 2026 (excluding the 53rd week) or approximately 16% (including the 53rd week); at least $8 billion in share repurchases for the full year; and a continued target of double-digit adjusted earnings per share growth for fiscal 2027. According to data from LSEG, Wall Street's consensus for the current quarter includes earnings per share of $1.86 and revenue of $25.40 billion.
Key focal points for the current quarter
Investors will focus on the execution of the strategy by new CEO Josh D’Amaro, who has been in the role for less than five months. In the prior quarter, he emphasized investing in intellectual property and advancing technology for storytelling to drive growth in theme parks and streaming. For this quarter, the market is also watching for progress on layoffs and cost control, with a recent round of reported cuts in July affecting ESPN and other departments. The impact of macroeconomic factors, including higher oil prices and rising travel costs, on the business will also be a key concern.
The experiences segment, including theme parks and cruises, remains a major driver of revenue and profit. Wall Street expects the segment to generate about $9.74 billion in revenue, up roughly 7% year-over-year, with high single-digit operating profit growth. While domestic attendance dipped slightly in the prior quarter, per-capita spending rose and global demand was solid. The company previously stated that domestic demand is healthy, with strong bookings for the second half of the year. However, competitors like Comcast's NBCUniversal have reported lower attendance at Orlando parks due to a soft consumer sentiment and rising travel costs, so the market will be watching to see if Disney faces similar pressure.
Streaming remains a major focus. Investors are interested in Disney+ subscriber numbers, advertising growth, and the progress of the ESPN direct-to-consumer app, which launched nearly a year ago. Analysts generally expect entertainment streaming revenue to show double-digit growth, with margins maintained at around 10% or higher. The prior quarter achieved double-digit margins for the first time, and the market hopes to see this trend continue.
For the sports segment, the company has previously guided for a third-quarter operating profit decline of about 14% year-over-year, largely due to a sharp increase in programming rights costs, including the timing of new agreements. For the full year, the operating profit guidance for the sports segment has been raised to mid-single-digit growth, supported by NFL-related deals.
Wall Street views and media analysis
Most analysts maintain a "buy" rating, though some have recently lowered their price targets, reflecting concerns over consumer spending and user engagement. UBS estimates revenue of $25.4 billion, segment operating profit of about $5.16 billion (slightly below company guidance), and earnings per share of around $1.91. They see growth accelerating in the second half of the year, driven by high single-digit growth in the experiences segment and double-digit growth in streaming. Firms like Jefferies and Citi have recently lowered their price targets to the $125–$135 range, noting that while the full-year guidance appears "achievable," mixed data from competitors like Netflix and Comcast, along with results from U.S. parks and streaming, could limit upside. The average price target is generally around $125–$135.
Overall, analysts believe that if the experiences and streaming segments outperform expectations, and D’Amaro can further clarify the path to monetizing IP and investing in technology, it could help boost confidence. Conversely, if theme park demand or box office performance is weak, it could spark discussions about breaking up the business or implementing further cost cuts. The media widely views this earnings report as a crucial point to assess whether the company, under D’Amaro's leadership, can maintain its growth momentum amid macroeconomic uncertainty. Beyond the numbers, statements made during the conference call regarding the maintenance of full-year guidance, returns on content investments, and the long-term profitability path of streaming will be particularly important.
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