Disney Stock Gains Despite Revenue Miss in Fiscal Q4
November 10 2023 - 6:43AM
Finscreener.org
DisneyU+02019s (NYSE:
DIS) earnings in fiscal
Q4 of 2023 (ended in September) surpassed forecasts, partly due to
profits from ESPN+ and growing theme park revenues, although
reduced advertising sales impacted overall sales. The House of
Mouse also announced plans to intensify its cost management
further, increasing its cost-saving goal by $2 billion to a new
target of $7.5 billion.
Following the earnings
announcement on Wednesday, DisneyU+02019s stock value climbed over
4% in after-hours trading.
How did Disney perform in Q4?
In the September quarter, Disney
reported revenue of $21.24 billion and adjusted earnings of $0.82
per share. Comparatively, analysts forecast revenue at $21.33
billion and earnings at $0.70 per share.
The company also ended the quarter
with 150.2 million subscribers for its streaming platform, higher
than estimates of 148.15 million.
Revenue saw a 5% increase,
marginally missing the consensus forecasts. This marks
DisneyU+02019s second consecutive shortfall in revenue, a pattern
not seen since early 2018.
The quarter also marks the debut
of DisneyU+02019s revised financial reporting structure, dividing
the business into three segments: entertainment, sports, and
experiences. The entertainment segment encompasses DisneyU+02019s
media operations and streaming services, sports includes ESPN, and
experiences cover theme parks, hotels, cruises, and
merchandising.
The experiences division enjoyed
a 13% revenue increase to $8.16 billion as the company benefited
from higher park attendance and ticket pricing both in domestic and
international markets. However, the report noted lower hotel rates
at DisneyU+02019s Florida resorts and higher operating expenses in
that region. Theme parks and related experiences accounted for
about 66% of the total revenue in this division.
What impacted Disney sales in fiscal Q4 of
2023
The decline in Disney’s
advertising revenue stemmed mainly from the ABC Network and other
television stations, which saw a dip in political advertising
during the quarter. Over the summer, CEO Bob Iger indicated the
possibility of divesting some television assets.
In the realm of streaming,
Disney+ gained 7 million new subscribers over the previous quarter,
totaling 150.2 million users, Hotstar included. The streaming
service also reported a reduction in losses from the previous
year.
Wall StreetU+02019s anticipation
was that Disney would announce a total subscriber count of 148.15
million for the quarter. The company highlighted its new additions
to streaming content, including theatrical releases like
“Elemental,” “The Little Mermaid,” and “Guardians of the Galaxy:
Vol. 3,” and the Star Wars series “Ahsoka,” contributing to its
recent subscriber growth.
Disney maintains its projection
of achieving profitability in its combined streaming services by
the fiscal fourth quarter of 2024.
CEO Bob Iger outlined four
strategic growth pillars: securing sustainable profitability in
streaming, transforming ESPN into the ultimate digital sports
platform, enhancing the performance and profitability of film
studios, and accelerating the expansion of its parks and
experiences sector.
Is Disney stock undervalued?
Despite the recent uptick in
share prices, Disney stock is trading at multi-year lows. In fact,
it has returned less than 5% to shareholders in the past decade,
trailing the broader markets by a wide margin.
Down 58% from all-time highs,
Disney stock is valued at more than $150 billion by market cap. It
is among the most recognizable brands in the world and the stock is
priced at less than 19x forward earnings which is not too
expensive.
Analysts expect adjusted earnings
to grow over 25% annually in the next five years. Disney stock also
trades at a discount of 15% to consensus price target
estimates.
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