Disney’s Pre-Earnings Report – What You Need To Know As An Investor
Fiscal Q3 will reflect the full impact of COVID-19 on the company’s financial performance.
avatar
Khan is a professional trader and business writer with over 7 years of experience in several financial markets. Khan takes pride in sharing insightful articles with his readers that help them improve their investment portfolios.
2020-08-03 10:46

The Walt Disney Company is scheduled to release its earnings report for the fiscal third quarter after the market close on August 4th. Disney’s second quarter concluded on March 28th and saw the impact from the Coronavirus pandemic in the last few weeks of the quarter only.

The third quarter, however, will reflect the full impact of COVID-19 on the company’s financial performance. The health crisis pushed Disney into temporarily suspending activity at the majority of its cash-generating segments in recent months.

In July, the American multinational, however, showed early signs of recovery as its theme parks in Florida, France, and Asia reopened for the public. It also signed an agreement with the NBA and offered support for the Basketball season to be resumed. Disney said that it would host all coaches and NBA players at its Orlando-based facilities. But the Disneyland Park in California is currently indefinitely shut down due to the surge in new state-wide COVID-19 cases.

The pressure, however, has not entirely been lifted from Disney. Several of its cruise lines and themes parks are still closed for the public. The mass media and entertainment conglomerate has also postponed the release of its major theatrical titles indefinitely.

What The Analysts Are Forecasting

The Zacks Consensus Estimate for Disney’s loss per share in the fiscal third quarter was announced at 35 cents in June. But owing to the rising COVID-19 uncertainty, the forecast has now been broadened to 43 cents per share instead. In comparison, the Burbank-headquartered company had printed $1.35 of adjusted earnings per share in the comparable quarter of last year.

In terms of revenue, the consensus suggests $12.7 billion in Q3 that represents a 37.5% decline on a year over year basis. In the past four quarters, Disney’s earnings have topped analysts’ estimates in two but fell shy in the remaining two. The average negative surprise, as per Zacks, stands at 7.9% for the past four quarters.

What Investors Should Look For

In its Q2 earnings report, Disney had highlighted a $1.4 billion worth of impact on its operating income due to COVID-19. Depreciation registered at 21% of Disney’s parks, experiences, and products’ revenue. If the cash outflows are minimized, current operating conditions will turn out to be significantly more manageable for the company.

Investors should also look for how Disney’s media networks business performs in the third quarter that generated more than 50% of its operating income in 2019. On the upside, Disney+ now boasts 54.5 million subscribers. A hefty demand for Disney’s new streaming service and a sharp increase in new sign ups is expected to offset a few of Disney’s losses in Q3.

Disney’s Performance In The Stock Market

Shares of the company tanked more than 0.5% in extended trading on Friday. At $116 per share, the Walt Disney Company is currently more than 20% down year to date in the stock market after recovering from an even lower $86 per share in March when the impact of COVID-19 was at its peak.

Disney’s performance in the stock market was slightly upbeat in 2019 with an annual gain of a little under 10%. At the time of writing, the U.S. company has a market capitalization of $211.22 billion and a price to earnings ratio of 39.46.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2020-08-03 10:46

avatar
About the Author
Khan is a professional trader and business writer with over 7 years of experience in several financial markets. Khan takes pride in sharing insightful articles with his readers that help them improve their investment portfolios.

DIS
$187.89
$0.57 0.30%
Perf. YTD 4.01%
52W high -7.45%
52W low 90.06%
PE Ratio -68.57
MKT Cap 341.07B

Analyst Ratings
Target Price $206.16
# of Analysts 25
Last updated 2021-04-10


2 Reopening Stocks to buy now
Let’s take a look at two blue chip companies who are set to benefit from the world getting back to a sense of normalcy in 2021.
By Mike Sakuraba | 3 weeks ago

Disney announces additional job cuts amid resurgence in Covid-19 cases
The company expects to complete the job cuts during the first half of 2021.
By Staff | 4 months ago
DIS

Disney reports its financial results for the fourth quarter, shares up
The company’s Disney+ paid subscribers reached to 73.7 million in the quarter, significantly higher than 57.5 million in the prior quarter
By Staff | 4 months ago
DIS

Considering investing on Disney or Comcast? Read this first.
What you need to know before jumping in.
By Alejandro | 7 months ago

Disney Reports Fiscal Q3 Earnings
​​​​​​​The most significant impact was at the Parks, Experiences and Products segment as most of our theme parks and resorts were closed for the entire quarter and our cruise ship sailings were suspended.
By Staff | 8 months ago
DIS

Disney's theme parks set to start phased reopening this weekend
Park begins phased reopening on Saturday.
By Staff | 9 months ago
DIS