The market just had its best week in a long time, and Walt Disney (DIS +1.34%) didn't sit out the buoyancy. Shares of the media giant rose 7.2% last week, better than the general market's 5.9% jump. This new trading week could be even better.
There's a lot going on at Disney in the coming days. The stock began last week near the nine-year low it hit in early October. If it successfully navigates through earnings season, gets back on track at the corner multiplex, and does something that it hasn't done in four years, it could be a winning week for Disney investors.
NYSE: DIS
Key Data Points
1. Earning its way back
Disney reports financial results for the fiscal fourth quarter on Wednesday afternoon. Expectations are mixed. Analysts are targeting $20.13 billion in revenue, essentially where it was for the final frame of fiscal 2022 a year ago. It doesn't mean that the House of Mouse is simply walking in place.
Some segments will be on the rise. Revenue at Disney+ and its other digital streaming services should continue to move higher with prices on the rise over the past year. Its theme parks segment will also deliver top-line growth, particularly internationally as those parks get back to business. It should be enough to overcome flat results at Disney World, as its largest Central Florida rival did post a decline in business earlier this earnings season.
There will also be headwinds holding back revenue growth. Its linear networks and studio entertainment segments are likely still driving in reverse. There are so many moving parts to Disney that it's hard to hit on all cylinders at the same time.
The bigger story will be the bottom line. Analysts see Disney earnings more than doubling to $0.68 a share. It posted a profit of $0.30 a share a year earlier. Estimates have been drifting lower in recent weeks, but Disney is executing on its efforts to trim more than $5.5 billion in annual costs by the end of next year. It has topped Wall Street income forecasts in two of its last three reports.
Image source: Disney.
2. Bringing back the dividend
Disney announced earlier this year that it would like to resume its cash distributions to shareholders before the end of this calendar year. It reiterated that desire back in August. Disney hasn't issued a semi-annual dividend since late 2019, just before the pandemic interrupted most of its operations.
Investors know they won't get much. Disney has never been a high-yielding investment. After going through layoffs earlier this year in its expenses-slashing efforts, cutting its shareholders a fat dividend check isn't a good look. However, even a modest declaration will reward investors for sticking around. It may even win back some institutional investors with income requirements in their positions.
Announcing the dividend this week makes sense, paired with the final quarterly earnings release of the 2023 calendar year. It's not the only thing that the media stock bellwether can work on, so it lines up with this week's report. Might Disney announce an asset sale, a cease fire on its latest proxy battle, or an industrywide resolution of the last remaining strike that has halted Hollywood productions?
All three things aren't entirely in Disney's control, but if it's able to make progress on any front to deliver good news for its shareholders there is no better incentive than a widely followed financial update and the subsequent earnings call to show off.
3. Putting the motion back in pictures
Disney is no longer an automatic hit factory when its puts out a big-budget theatrical release. Even its deep bench of Marvel characters has fallen flat from time to time. It will get another swing when The Marvels hits the multiplex over the weekend.
The new film starring Brie Larson as Captain Marvel officially opens on Friday, but theater chains will be offering early screenings on Thursday. In short, investors will know if it's off to an encouraging start before the end of the trading week. The prognosis right now isn't promising. There were reports of lengthy reshoots to smooth out the storyline and improve the film's chances to succeed.
With stateside exhibitors just experiencing their second worst weekend of box office receipts of 2023, it's not just Disney that can use a hit. Expectations are low, and that can only help Disney if fans show up in healthy numbers on Thursday to be the first to marvel at The Marvels.
