What do Q1 earnings hold for Disney’s stock? – Stock Markets
Walt Disney reports earnings before Wall Street’s opening bell on May 7
Solid profit growth is expected despite a minor revenue jump
Stock price experiences a pullback amid an overall strong 2024 performance
Impressive start to the year
After lagging against the broader market for the past three years, Disney’s stock has started the year on a firm note, outperforming major US indices. To give more context, Walt Disney is the second-best performing stock within the elite club of the Dow Jones 30 in 2024 as markets seem to be overly optimistic about the firm’s restructuring plan in place after the return of Bob Iger in the CEO position in 2022.
![](https://www.xm.com/wp-content/uploads/2024/05/Disney-Perf.png)
Some positive signals include the recent restatement of dividends, which were suspended during the pandemic. Meanwhile, the firm managed to reach an agreement with Governor DeSantis to end their two-year legal battles over the control of a tax district that encompasses Walt Disney World.
On the operational front, traffic in theme parks is expected to grow around 10% against the same quarter a year ago, driven by strong business in Asia. Moreover, Netflix’s higher-than-expected subscriber growth in the first quarter has brightened the outlook of the broader streaming sector, increasing the odds for an upside surprise in Disney+ net subscriptions.
Sluggish growth but improving profitability
Disney’s focus has shifted towards profitability and cost reduction given that its streaming segment had been suffering losses for the past couple of years. In the last quarter, Disney+ lost 1.3 million subscribers following price hikes in its provided service packages but recorded an increase in average revenue per user. This is a clear indication that the firm is striving for financial robustness in the expense of growth.
The restructuring plan is reflected in the firm’s forecasted financials as Disney is anticipated to post revenue of $22.10 billion for the first quarter, according to consensus estimates by LSEG IBES, which would represent year-on-year increase of 1.23%. Besides this marginal growth in revenue, earnings per share (EPS) are projected at $1.10, marking a 18.0% jump on an annual basis.
Valuation reflects optimism
Disney has been facing a slowdown in its streaming segment, while the firm has clearly failed to return to its pre-pandemic standards. However, as its full-scale transformation plan has started to deliver some positive results, investors seem to be restating their trust in the firm’s growth potential.
![](https://www.xm.com/wp-content/uploads/2024/05/Disney-Val.png)
Following a solid start to the year, Disney’s stock has been trading with a considerable premium against the S&P 500. Specifically, the 12-month forward price-to-earnings ratio, which denotes the dollar amount someone would need to invest to receive back one dollar in annual earnings, currently stands at 21.4x versus the S&P 500’s multiple of 20.2x.
Share price falls below 50-day SMA
Disney’s shares have gained significant ground in 2024, climbing to their highest level since August 2022. However, the stock price has been undergoing a pullback since then, sliding beneath the 50-day simple moving average (SMA) ahead of the first quarter earnings announcement.
![](https://www.xm.com/wp-content/uploads/2024/05/Disney-TA.png)
Should earnings disappoint, the price could re-test the recent support of $110.50 ahead of the February support of $106.00, which lies very close to the upper bound of the price’s recent positive gap.
Alternatively, solid results coupled with optimistic guidance over subscriber growth could propel the price towards the February 2023 peak of $118.00, a break above which might open the door for the 2024 high of $123.70.
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.