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Disney Fiscal Q4 2019 Earnings Preview: What to Expect

The Walt Disney Company DIS is set to report fiscal fourth-quarter 2019 results on Nov 7, after market close. It seems that the cost of launching Disney+ along with Fox’s assets will continue to weigh on Disney’s earnings this time as well. However, some mergers in recent times may boost it revenues.

Mergers Driving Healthy Revenue Growth 

The Zacks Consensus Estimate for Disney’s fiscal fourth-quarter 2019 revenues is $19.03 billion, suggesting growth of 33% from $14.31 billion reported a year ago. Disney’s fiscal fourth-quarter revenues are likely to have benefited from the Disney-Fox merger and an increased stake in Hulu on Mar 20 and Oct 14, respectively. Exposure to crowd-pleasing pop culture shows like Star Wars, Avatar and The Simpsons, and a massive video library, which already has millions of followers, are also expected to drive revenues.

Despite the exponential rise in cord-cutters this year, Disney’s media networks segment had generated 33% of total revenues in fiscal third-quarter 2019 and is expected to keep contributing significantly in the fiscal fourth quarter.

Factors Likely to Have Weighed on Earnings

Even after stellar results from Disney’s Lion King, soft ticket sales of Fox films may have offset Disney’s revenues from the studio segment in the fiscal fourth quarter. The Zacks Consensus Estimate for Disney’s fiscal fourth-quarter earnings is 95 cents per share, indicating a 35.8% decline year over year.

Investors had been restless since Disney announced the launch of Disney+ as it has heavily invested in the streaming platform to stand out in this era of streaming. Building up of rivalry with the upcoming Apple Inc. AAPL Apple TV and the lofty goal of surpassing market dominator Netflix, Inc. NFLX and Amazon.com, Inc.’s AMZN Amazon Prime Video is creating pressure on the company. These may have led to a lot of cash outflow from Disney, especially in the fiscal fourth quarter, which may have affected its bottom line.

Additionally, Disney already offered a discount in August to new and existing members of its official fan club, D23. The deals cost viewers less than $4 a month but are likely to have piled up on Disney’s upcoming earnings.

Summing Up

The entertainment king is expected to perform well in terms of revenues, quite similar to the last quarter as influences are seemingly mostly unchanged. On the other hand, concerns related to Fox’s assets and costs related to Disney+ are likely to have left a negative impact on its earnings.

Also, our proprietary model doesn’t conclusively predict an earnings beat for The Walt Disney Company this time around. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Disney carries a Zacks Rank #5 (Strong Sell) and an Earnings ESP of +0.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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