Categories Earnings, Leisure & Entertainment

Walt Disney (DIS) likely to report weak Q1 earnings on Feb 4

The Walt Disney Company (NYSE: DIS) is slated to report its first-quarter 2020 earnings results on Tuesday, February 4, after the market closes. The bottom line will be hurt by higher costs and expenses while the top line will be benefited from the positive contribution from the business segments.

The company is expected to highlight additional details with regard to the impact of the China virus on Shanghai Disneyland. The park has been temporarily closed due to the coronavirus outbreak that has a death toll of 170 and the confirmed cases have been increased to 7,711 in China. The closing comes at a peak time considering the Lunar New Year.

Walt Disney park
Disneyland Park, Anaheim. Courtesy: James Hartono on Unsplash

This quarter turned out to be important for Disney as Disney+ streaming service has successfully completed one full quarter. Investors expect a growth in the number of subscribers signing up for the streaming service. Also, traders believe that the service could give stiff competition to Netflix (NASDAQ: NFLX) in the streaming market.

In addition, ESPN is likely to decline due to higher programming, production, and marketing costs related to the NFL, college sports and MLB. But the increase in contractual rates and ACC Network launch could lessen the decline.

For the quarter, Disneyland Resort is likely to show growth as average ticket prices, food, beverage, and merchandise spending could possibly increase guest spending. The company is predicted to incur additional costs related to the consolidation of Hulu, costs related to Disney+ launch, and continued investment in ESPN+.

Read: Electronic Arts Q3 earnings review

Analysts expect the company’s earnings to drop by 20.70% to $1.46 per share while revenue will jump by 36% to $20.78 billion for the first quarter. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters. The majority of the analysts recommended a “strong-buy” or “buy” rating with an average price target of $157.76.

For the fourth quarter, Walt Disney posted a 66% dip in earnings due to higher costs and expenses. However, the business segments contributed positively to the top line, which has risen by 34%. Disney experienced a decrease at ESPN due to increases in NFL, college sports and MLB programming, production and marketing costs.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

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