Disney Q2 Preview: Another EPS Beat Inbound?
Earnings season continues to unwind, with various companies slated to report in the coming weeks. So far, the feared “earnings apocalypse” has failed to materialize, helping keep sentiment somewhat in check.
And soon, we’ll hear from the media and entertainment titan Walt Disney Company DIS. Disney has assets that span movies, television shows, and theme parks.
It raises a valid question: how does the company shape up heading into its earnings release? We can use streaming results from Netflix NFLX as a small read-through. Let’s take a closer look.
Netflix
Streaming titan Netflix posted mixed top and bottom line results, exceeding the Zacks Consensus EPS Estimate by 2% but delivering revenue just marginally under expectations. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
In addition, Netflix reported Net Subscriber Additions of roughly 1.8 million, representing a massive improvement from the year-ago quarter when the streaming titan lost 200k subscribers.
Following the release, the market didn’t react well, as we can see illustrated by the green arrow circled in the chart below.
Image Source: Zacks Investment Research
Disney
Analysts haven’t been bullish for Disney’s quarter to be reported, with the $0.88 per share earnings estimate being revised 10% lower since February. The quarterly earnings estimate implies an 18% pullback within earnings year-over-year.
Image Source: Zacks Investment Research
In addition, our quarterly revenue estimate presently sits a $21.7 billion, implying a 13% climb from the year-ago quarter. Since February, the revenue estimate is down a marginal 0.7%, as we can see in the chart below.
Image Source: Zacks Investment Research
Investors will closely monitor Disney+ results, similar to what we saw in NFLX's release. For the quarter, the Zacks Consensus Estimate for Disney+ subscribers stands at 166 million, implying growth of 20% year-over-year.
Disney has consistently surprised positively on this metric, chaining together five consecutive quarters of exceeding the Zacks Consensus Estimate.
Image Source: Zacks Investment Research
Regarding valuation, Disney’s 2.1X forward price-to-sales ratio sits below the five-year median and highs of 3.4X in 2022, with the company carrying a Style Score of “C” for Value.
Image Source: Zacks Investment Research
Bottom Line
While this week may not be as hectic as others regarding earnings releases, we still have several notable quarterly reports scheduled to come, including one from the Walt Disney Company DIS.
Analysts haven’t been bullish regarding Disney’s earnings outlook, with the current quarterly EPS Estimate seeing negative revisions since February. On the flip side, the company’s revenue picture remains relatively stable, down marginally over the last few months.
Heading into the release, Disney is a Zacks Rank #3 (Hold) with an Earnings ESP Score of -5.8%.
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