Earnings Preview: Can Walt Disney Company (DIS) defy recession concerns?

The Walt Disney Company (NYSE: DIS) had a positive start to fiscal 2025, with its streaming business turning profitable and hit movies driving strong box office revenue in the early months of the year. While the entertainment behemoth has remained largely unaffected by economic uncertainties, tariff-induced recession fears may weigh on its performance. For the stock, 2025 has been a challenging year so far, significantly underperforming the broad market in recent months.

Estimates

Walt Disney will publish its second-quarter 2025 results on Wednesday, May 7, at 6:40 am ET. Estimates by Wall Street analysts suggest flat Q2 earnings — unchanged from last year’s $1.21 per share. On average, market watchers predict revenues of $23.13 billion for the March quarter, compared to $22.08 billion a year earlier. The company has consistently beaten earnings estimates in the past seven quarters.

The recent stock performance shows that investors failed to positively respond to the company’s impressive first-quarter performance. Based on the last closing price, the stock has lost nearly 18% since the announcement and is trading below its 12-month average value of $100.31. Meanwhile, the stock has shown signs of recovery since early April when it hit the lowest level in over a year. DIS appears to be undervalued right now, offering an opportunity for long-term investors. In general, analysts following Disney are bullish on the stock’s prospects.

Earnings Beat

For the first three months of FY25, Disney reported a 5% year-over-year increase in revenues to $24.7 billion. As a result, adjusted earnings jumped 44% from last year to $1.76 per share. Net income attributable to the company was $2.55 billion or $1.40 per share in Q1, vs. $1.91 billion or $1.04 per share in the prior-year quarter. Earnings topped expectations while revenues matched estimates.

Disney’s CEO Robert Iger said in the Q1 earnings call, “We had the top 3 movies of 2024 at the global box office, and I want to thank and congratulate our creative teams on such an incredible year. Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP. On top of our studio’s outstanding performance, we saw growth in streaming profitability, historic ratings at ESPN, and the strong and enduring appeal of Disney’s Experiences business. Overall, we’re very encouraged by our results this quarter.”

Outlook

The company said that for fiscal 2025 it expects high-single-digit growth in adjusted earnings per share. The management is optimistic about continued growth in the Experiences division, which includes theme parks, resorts, and cruise ships. Additionally, the company continues to improve the profitability of its DTC streaming business. However, lingering economic uncertainties, compounded by the new import tariffs, can weigh on performance in the coming months.

In a sign that they are regaining momentum ahead of the earnings, Disney’s shares traded slightly higher in early trading on Monday. The stock gained about 11% in the past 30 days.