General

Tune in for Disney's earnings: here's what to watch

Annie Charalambous, Thursday, 12 November 2020

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The Walt Disney Co. is expected to post its fiscal full year and Q4 earnings after Thursday’s close. 

In August, for the quarter ending June, Disney surprised us with a nearly 120% beat on EPS estimates (0.08 compared to the -0.43 forecast). For this quarter, analysts* expect an even direr -0.68, especially bleak compared to 1.07 reported for the same quarter last year. They also expect revenue to be down 25% YoY.

Investors will be watching this one closely, with theme parks, cruises, its studios, and retail or merchandise among the biggest sectors of their business to have been impacted by the pandemic. While some parks have since reopened, with restrictions, it’s still unclear just what that has meant for their overall business, and we’ll be listening in on execs’ guidance for the months ahead.

What has benefitted from the stay-at-home order, however, is streaming. Disney+ numbers have soared as the world entered lockdown (with 60.5 million members as of Q3, having doubled from the one before), but the question is whether it will help cushion the overall hit taken to the business. Also bearing in mind that Disney’s streaming catalogue includes a majority stake in HULU (adding a further 35.5 million users), as well as 8.5 million users for ESPN+ which has, for lack of live sporting events, seen numbers fall. The company also trialled pay-per-view on Disney+ this past quarter for the release of Mulan -- the results of which we also expect in tonight’s call.

By comparison, Netflix has a larger share of the market with nearly 200 million members worldwide. Its user numbers grew by about 26 million in the first half of this year (compared to 28 million for all of 2019), and Amazon, a close second with its Prime Video service, has  ~150 million users globally. Both companies, however, stand only to gain from stay-at-home orders, compared to Disney’s larger subsidiaries.

Year-to-date, DIS is down 5% while NFLX and AMZN are up 52% and 70% respectively.

*Data from Zacks Investment Research via NASDAQ

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