Wall Street expects a year-over-year decline in earnings on higher revenues when Walt Disney reports results for the quarter ended December 2022.
The Walt Disney Company will release Q1 FY23 earnings report after the close of regular trading on February 8, 2023. The Bloomberg consensus Revenue Estimate is $23.393B, The consensus Adjusted Net Profit Estimate is $1.331B, and The consensus EPS Estimate is $0.763.
Disney stock has been a colossal disappointment for investors over the past one years, falling almost 44%. However, it has risen nearly 26% this year.
Latest Results
Walt Disney Co missed Q4 Wall Street earnings forecasts as the entertainment giant racked up more losses from its push into streaming video.
Disney reported $20.2 billion in salesfor its fiscal fourth quarter—which corresponds to the calendar third quarter—up 9% from the same period last year. Wall Street consensus had called for $21.3 billion in sales. Net income was $162 million, up 1% and far short of the $788 million on average expected by analysts. That translates to earnings per share of 9 cents, or 30 cents per share after adjusting for one-time costs and benefits. That is down 19% from the 37 cents in adjusted earnings per share in the year-ago period. It’s also a wide miss from the 55 cents that analysts expected before the report.
Its marquee service, Disney+, reported 164.2 million subscribers in the fiscal fourth quarter, surpassing Factset estimates of 161 million. The streaming unit, known as direct-to-consumer, lost $1.5 billion during the period.
The company gained more streaming customers than analysts had expected from July through September, but media investors have increasingly focused on profits over streaming subscription numbers.
What does Q1 focus on?
Disney's showdown with activist investor Nelson Peltz will raise the specter not only of prioritizing streaming profitability but also on possible changes to the asset portfolio, especially with ESPN or Hulu. Though it is being positive on the long-term outlook, fiscal 1Q may post rare streaming-user declines with the absence of the IPL tournament on Hotstar. Streaming losses are expected to sequentially improve to less than $1.3 billion vs. $1.5 billion in fiscal 4Q, and things may get better in fiscal 2Q with the full effect of the price increase and the new ad tier. Parks momentum should drive margin expansion even after costs weighed on fiscal 4Q profit.
Film has been a strong performer thanks to the “Avatar” sequel, but investors will look for any change to the high-single-digit operating-income growth forecasts for 2023.
Disney says 'Avatar: The Way of Water' fourth highest-grossing film worldwide
“Avatar: The Way of Water” claimed the No. 1 spot on the domestic box office charts for the seventh weekend in a row with an additional $15.7 million, according to studio estimates on Sunday.: "This past weekend, 'Avatar: The Way of Water' became the fourth highest-grossing film worldwide at the global box office, surpassing 'Star Wars: The Force Awakens.' Nominated for four Academy Awards, including Best Picture, the film remained No. 1 at the domestic box office after seven weekends in release-a feat that has not been achieved since the original 'Avatar' was released in 2009. Additionally, 'Avatar: The Way of Water' is the second fastest film in history to reach $2 billion, after 'Avengers: Endgame,' and it is now the 11th highest-grossing release of all time domestically.
Disney overhaul looms following Bob Iger’s return?
With a proxy battle between Peltz and the firm, Disney makes for a very interesting turnaround play for investors willing to give the beaten-down media gem another look.
Activist involvement is no guarantee of an imminent turnaround. In some circumstances, such involvement may slow progress down. Disney went as far as to say Nelson Peltz "lacks skills and experience" to help the company as it continues to tread water. Undoubtedly, investors will get to have their say. Still, in the meantime, recent action in the stock suggests a board shuffle could be the best way to combat what Peltz views as a "crisis."
Analyst Opinons
Disney price target raised to $122 from $110 at Macquarie
Macquarie analyst Tim Nollen raised the firm's price target on Disney to $122 from $110 and keeps an Outperform rating on the shares as part of the firm's Q4 media networks preview. Fiscal Q2, as CEO Bob Iger's first earnings in his return, "will be an important report," with an update on improvements in direct-to-consumer losses top of mind, the firm said.
Wells Fargo bullish on Disney, says Iger 'will come out swinging'
Wells Fargo analyst Steven Cahall thinks returning Disney CEO Bob Iger "will come out swinging" on the upcoming fiscal Q1 earnings call "to fend off criticism." The firm sees a refocus on intellectual property instead of subscribers, aggressive cost action and the potential for earnings upgrades. Wells expects Disney to back away from fiscal 2024 direct-to-consumer subscriber targets, in favor of empowering content creation and streaming profitability. The analyst thinks the company will announce a $2B direct-to-consumer cost reduction program focused mostly on non-programming costs. With a proxy battle looming, management's best avenue to defend against activism is a higher stock price, writes the analyst. Wells is bullish on Disney shares into the results and keeps an Overweight rating on the name with a $125 price target.
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