Walt Disney (DIS) Consumer Discretionary – Media | Reports February 7, After Market Closes
Disney Q1 Earnings – Key Takeaways
- The Estimize consensus is calling for earnings per share of $1.50 on $15.30 billion in revenue, 2 cents higher than Wall Street on the bottom line and about $30 million on the top
- ESPN remains the point of focus for investors this quarter, but ticket sales from Star Wars Rogue one isn’t far behind
- Studio Entertainment and Parks and Resorts remain the lone bright spots as both divisions continue to post positive growth
- What are you expecting for DIS? Get your estimate in here!
Disney prepares to kick off its fiscal 2017 when it releases first quarter results tomorrow after the market closes. The entertainment giant is coming off a disastrous fourth quarter that fell short of the Estimize consensus by 8 cents per share on the bottom line and about $400 million on the top. The report didn’t phase investors though, as share climbed about 19% in the past 3 months. Tomorrow’s results will yet again focus on the performance of ESPN but also highlight the success of the newest Star Wars movie released in mid December. It’s understandable that expectations for the first quarter remain tepid given the company’s share of ups and down last year.
Analysts at Estimize expect earnings to come in 1 cent higher than the Street at $1.50 per share, reflecting a 7% decline from a year earlier. That estimate fell by 5% following dismal fiscal fourth quarter results. Revenue for the period is forecasted to increase 1% to $15.30 billion on robust ticket sales from Star Wars Rogue One. Historically the stock doesn’t react immediately through the print but tends to move the most in 30 days prior and after a report.
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As always ESPN subscription numbers fall front and center when Disney announces quarterly results. The multimedia sports network continues to face an uphill battle in light of cord cutting behaviors and wider adoption of skinny bundles. Operating income from Cable Networks decreased $207 million during Q4 due to decreases at ESPN and Disney Channel. Growth at Freeform (formerly ABC Family) helped offset some of these losses through lower programming and production costs, and a decrease in marketing expenses. Income from broadcasting, on the other hand, increased $60 million to $224 million, on greater program sales from shows such as Luke Cage and Quantico. However, the overall performance of media networks is still predicated on the performance of ESPN, which otherwise looks bleak.
Beyond media, performance in Studio Entertainment and Parks and Resorts continues to excel on the back of blockbuster movies that also translate to attractions at the theme parks. Studio entertainment is likely to see a huge uptake in Q1 from the roaring success of Star War Rogue One. And while the economy improves and travel trends start to pick up that plays into the hands of Parks and Resorts. Both divisions posted positive growth in the fourth quarter and remain on track to do so again.
Disney also generates a large portion of total revenue from consumer products and interactive media which includes licensed merchandise. Sales from this division saw considerable pressure last quarter as revenue dropped 15% and income declined 5%. The company quickly pointed to currency headwinds and the discontinuation of the Infinity console game business for the lackluster performance. With the dollar trending close to a short term high, it’s unlikely Disney does a complete 180 this quarter.
Do you think DIS can beat estimates? There is still time to get your estimate in here!
Article by Estimize