Walt Disney is set to release its full-year and fourth quarter (Q4) earnings on Wednesday, 14 November 2024 at 9.50pm AEDT. In the previous quarter, Q3 2024, Disney exceeded expectations in both revenue and earnings. The company’s streaming business, including Disney+, Hulu, and ESPN+, achieved profitability for the first time.
Key financials for Q4 2024 are expected to be an earnings per share (EPS) of $1.10 and revenue of $22.47 billion. This is a slight decrease compared to the previous quarter’s EPS of $1.39 and revenue of $23.16 billion. Despite this, Disney experienced strong growth in Q3 2024, with total segment operating income rising by 19% and adjusted EPS increasing by 35%.
The entertainment segment saw a significant increase in operating income, mainly due to improvements in direct-to-consumer and content sales/licensing. Disney’s streaming services, particularly ESPN+, were profitable, leading to positive profitability for the streaming businesses a quarter earlier than expected. The success of the film Inside Out 2 also contributed to an increase in Disney+ sign-ups.
Looking ahead to Q4, Disney has raised its full-year adjusted EPS growth target to 30%. The company is focused on exceeding cost-saving targets while maintaining profitability in streaming services like Disney+ and ESPN+. Subscriber growth for Disney+ is expected to be modest in Q4, and content profitability is anticipated to remain stable throughout the fiscal year.
However, the experiences segment may see a decline in operating income in Q4 due to moderation in consumer demand. Factors such as the impact of the Olympics on Disneyland Paris and economic conditions in China could influence this decline. On the other hand, demand for Disney Cruise Line remains strong, despite pre-launch expenses for new ships, Disney Adventure and Disney Treasure.
In terms of stock performance, Walt Disney’s share price has faced challenges in regaining momentum since its significant drop in March 2021. The current share price is hovering around $100 – $102, with potential resistance at $108. A sustained break above these levels could signal a rally towards longer-term resistance at $120 – $126. However, if the share price remains below $100 – $102 and $108, there are downside risks back into the low $80s.
Overall, Walt Disney’s upcoming earnings report will provide insight into the company’s financial performance and strategic outlook for the future. Investors will be watching closely to see if Disney can maintain profitability in its streaming services and navigate challenges in the experiences segment.
