The Walt Disney Company (NYSE: DIS) is busy executing its turnaround plan aimed at catalyzing business growth, after recovering from the pandemic-era slump. The company is expected to report revenue and earnings growth when it announces third-quarter results next week.
Of late, the performance of Disney’s shares has not been very encouraging, losing around 23% in the past four months alone. Meanwhile, the low valuation has created a rare opportunity to own the blue-chip stock that has long been a favorite among investors. The stock’s long-term prospects are strong, while the mixed economy and weak consumer confidence remain a challenge in the near term.
The Burbank-based entertainment behemoth will be unveiling its third-quarter 2024 results on August 7, at 6:30 am ET. It is expected to report positive results for the June quarter, with an estimated 16% increase in adjusted earnings to $1.19 per share on revenues of $23.04 billion, which is up 3% year-over-year. Interestingly, the bottom line beat estimates consistently in the past four quarters, while revenues missed each time.
Growth Plan
As part of its efforts to drive revenue growth and turn the streaming business profitable, the company last year announced the launch of a standalone ESPN streaming platform. The growth plan also includes a strategic partnership with Epic Games. While Disney’s TV broadcasting business is going through a rough patch, the Disney+ Hulu platform continues to expand subscriber base and is moving toward profitability. Extending the post-COVID rebound, the theme park segment has delivered strong performance consistently in the recent past.
“When you consider all of our businesses as a whole, from entertainment to sports to experiences, it’s clear that no one has what Disney has. The turnaround and growth initiatives we set in motion last year have continued to yield positive results, and we are executing against our ambitious strategic priorities with both speed and determination,” Disney’s CEO Bob Iger said during his post-earnings interaction with analysts in early May.
Key Metrics
In the previous quarter, a 5% revenue drop in the main entertainment division was more than offset by growth in experiences and sports segments. As a result, total revenues edged up 1% year-over-year to $22.1 billion. Q2 profit, excluding special items, climbed 30% to $1.21 per share, aided by a decrease in operating expenses. Earnings also beat the Street view. Looking ahead, the management targes earnings growth of 25% for fiscal 2024, on an adjusted basis, and looks to generate more than $8 billion in free cash flow.
Disney’s stock price has more than halved since peaking in March 2021, and it slipped below the 12-average this month. The stock traded slightly higher in the latter half of Wednesday’s session.