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Disney Could Provide Key Updates When It Reports Earnings Next Week

By Danny Vena – Updated Apr 24, 2019 at 3:56PM

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The multimedia giant has a lot of irons in the fire. We could soon learn a lot about the future.

Last year was one of transition for investors in Disney (DIS 1.09%). It was just over a year ago that the House of Mouse announced its intentions to acquire the film and television studio assets of Twenty-First Century Fox (FOX) (FOXA). The company staved off a challenge from rival Comcast (CMCSA 1.11%) early in the year and is nearing the finish line of the regulatory process.

The company also announced its intention to launch two streaming services. The first, ESPN+, launched early last year and quickly topped 1 million subscribers. The second, Disney+, is set to roll out later this year.

Disney is scheduled to report the financial results of its first quarter after the market closes on Tuesday, Feb 5. The company is likely to provide updates on some of these exciting developments. Let's look at the company's previous quarter and a few recent revelations to see if it provides any insight into what investors can expect when Disney reports earnings.

Disney's Pixar Pier at Night, June 2018.

Image source: author.

A look back

Disney closed out its fiscal 2018 with record revenue, net income, and earnings per share. For the fourth quarter, revenue grew to $14.31 billion, up 12% year over year, while adjusted earnings per share of $1.48 represented 38% growth. Both sailed past analysts' consensus estimates, which were calling for revenue of $13.72 billion and adjusted earnings per share of $1.33.

The biggest contributor to the better-than-expected performance was the studio entertainment segment, which grew 50% year over year to $2.15 billion. This success was aided by Incredibles 2 and Ant-Man and the Wasp. In addition, Disney continues to reap the benefits of a record-setting slate of Marvel blockbusters, including Avengers: Infinity War.

Both the media networks and parks and resorts segments, which produce the bulk of Disney's revenue, grew to $5.96 billion and $5.07 billion, respectively, each up 9% year over year.

Current events

There have been several recent revelations that give us insight into what's coming down the pike for Disney.

The Screen Actors Guild this week awarded its top prize to Marvel's Black Panther, which won the award of outstanding performance by an ensemble in a motion picture. The movie was one of Disney's biggest success stories of 2018, topping $1.3 billion in box office, and breaking into the top 10 worldwide grossing movies of all time. The movie is also in the running for best picture at the Academy Awards.  

Disney is ramping up its focus on its streaming services. A recent regulatory filing showed that the company lost more than $1 billion on its streaming efforts in 2018, with further investments to come this year. The biggest contributor to the deficit was $580 million on content spending for Hulu, in which Disney has a 30% stake. The company reported a loss of $469 million from its newly formed direct-to-consumer segment, which will house all of Disney's streaming offerings.

On the heels of that announcement, Hulu said it would lower the price of its entry-level, ad-supported service by $2 -- from $7.99 to $5.99 per month. This announcement came soon after streaming giant Netflix announced a price increase of $2 to $12.99 for its most popular plan, leading some to speculate if the streaming wars have begun in earnest.

Finally, Disney said it would provide more details about its direct-to-consumer business and its upcoming streaming service, Disney+, as well as a preview of some of the programming developed for the platform, on an investor day scheduled for April 11.

Disney plus logo.

Image source: Disney.

Looking ahead

Disney doesn't provide quarterly guidance, preferring to focus on the strength of its business rather than on the short-term whims of analysts. That said, knowing what Wall Street is expecting can help provide context for the overall sentiment on the company. In this case, analysts' consensus estimates are calling for revenue of $15.18 billion, a 1.1% year-over-year decline, and adjusted earnings per share of $1.55, down 18.8% from the prior-year quarter.

We could learn a lot about the company's future plans when Disney reports earnings on Tuesday, Feb. 5.

Check out the latest Disney earnings call transcript.

Danny Vena owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

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