Disney’s earnings day lurks around the corner. Here’s what investors should know ahead of this important event for Disney stock and its investors.
As Disney stock still struggles to find its footing in 2022, the House of Mouse is gearing up to report fiscal Q1 results this week. The earnings report will come out on February 9, after the closing bell.
Below is what DIS investors should be paying close attention to on earnings day. Can Disney finally impress and trigger bullishness that has been dormant for so many months?
Disney earnings: the timeline
As mentioned above, Disney’s earnings report will drop after the end of Wednesday’s trading session — more specifically around 4:05 p.m. EST, as it usually does.
The earnings call will follow shortly thereafter. It is scheduled to start at 4:30 p.m. EST and last around one hour. It will likely be hosted by CEO Bob Chapek and CFO Christine McCarthy. It should include a brief, 20-minute long Q&A session with Wall Street analysts.
Disney earnings: the expectations
Currently, and according to Seeking Alpha, analysts believe that Disney will post revenues of $20.96 billion that would be 29% higher YOY. Such strong growth would be due, in great part, to dismal 2021 comps of -22% growth in fiscal Q1, when park revenues fell off a cliff.
On earnings, projected EPS of $0.63 would also represent a huge improvement of 97% over last-year’s levels. This would likely be driven by the higher revenues and efforts to reduce costs amid a challenging late-pandemic period.
Disney earnings: key topics
Certainly, parks and entertainment will be a front-and-center topic of discussion. This has been the most impacted of Disney’s segments in the face of the COVID-19 crisis. Expect large numbers here, as the business continues to rebound.
However, I doubt that parks will be the most important factor moving Disney share price higher or lower after earnings. Investor sentiment is most likely to be swayed by Disney+ and the growth trajectory of the streaming service platforms.
In the last earnings season, Disney disappointed by delivering growth in Disney+ subscribers that failed to match expectations by a solid 7 million users. It did not help that ARPU (average revenue per paying user) continued to drop, now to a meager $4.12.
It is possible that the subject of sports gambling could resurface this time. Last quarter, the CEO unveiled early-stage initiatives in betting that would cater to younger consumers. While focused on short-term financial recovery, analysts and investors will probably be also interested in hearing more about long-term growth opportunities.
Disney earnings: stock price behavior
Over the past year, Disney stock has been a loser, certainly relative to the rest of the market. While the S&P 500 managed to climb around 16% since this time in 2021, DIS shares have sunk by 21%. Losses have accelerated since fiscal Q4 earnings, in November.
Shareholders and potential investors are in need of good news to finally support DIS stock once again. I am not sure that they will find what they are looking for this time. The silver lining is that DIS now trades at fairly attractive valuation multiples, which could be an invitation for value investors to buy the dip.
The pandemic has wreaked havoc in Disney’s ability to produce earnings and cash flow, distorting 2020-2022 metrics. But looking further out in the future, DIS trades at a projected 2023 P/E of 26 times, at which point EPS is expected to be growing at 36%.
On the surface, this does not seem like a bad deal at all.
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