The Walt Disney Company (NYSE: DIS) is preparing to publish second-quarter earnings next week, amid expectations for a mixed outcome. The entertainment behemoth has undergone a major transformation under Bob Iger who has returned to the company as chief executive officer. The focus of the restructuring is streamlining operations and making the business more cost-effective.
Stock Recovers
Disney’s stock had an upbeat start to 2024 and has grown an impressive 23% so far. While DIS continues its recovery from the multi-year lows seen six months ago, it remains well below the 2021 peak. The low price and promising growth potential make the stock a good investment option. Moreover, the company reinstated dividend payments a few months ago, three years after suspending it during the pandemic.
The Burbank-headquartered media giant’s second-quarter report is slated for release on Tuesday, May 7, at 8:00 am ET. It is estimated that Q2 revenues declined modestly to $20.65 billion from $21.8 billion in the year-ago quarter. The consensus earnings estimate is $1.03 per share for the March quarter, which represents an increase from the $0.93/share reported in the year-ago quarter.
For Disney’s management, a key priority has been to reduce losses for the streaming segment and turn it profitable, and recent data show it is on the right track. It is expected that the business will get a big boost from ESPN’s flagship direct-to-consumer streaming service, which is scheduled for launch in the fall of 2025. The company keeps looking for opportunities to reduce costs and catalyze long-term growth through prudent capital allocation.
Q1 Outcome
In the first quarter, Disney’s adjusted profit increased to $1.22 per share from $0.99 per share a year earlier. Earnings also exceeded estimates. On a reported basis, net income was $1.91 billion or $1.04 per share in Q1, compared to $1.28 billion or $0.70 per share in the prior year period. Meanwhile, Q1 revenues remained broadly unchanged at $23.5 billion.
From Disney’s Q1 2024 earnings call:
“ESPN’s domestic sports business continues to grow and even amid a challenging linear landscape, ESPN increased its overall audience in calendar year 2023, and it continues to break records in ratings. Ultimately, our mission is to make ESPN into the preeminent digital sports brand, reaching as many sports fans as possible and giving them even more ways to access the programming they love in whatever way best suits their needs.“
In the past three months, shares of Disney have stayed above their 52-week average. The stock traded lower on Tuesday afternoon.