Shares of Walt Disney (DIS 0.62%) slumped after the media giant posted mixed financial results last week, but investors can't be feeling too bad. The stock is still beating the market, something that Disney hasn't done since 2020.
A big reason for the stock's post-earnings retreat is that it warned of some potential softness in the current reporting period, the fiscal third quarter that straddles the end of springtime and the start of summer for Disney. It expects to recover by the end of fiscal 2024, but this doesn't mean that shareholders need to worry. Let's go over some of the reasons why Disney stock can stay hot even as the temperatures start to heat up in the coming months.
NYSE: DIS
Key Data Points
1. Disney's finally scoring in the multiplex
A big knock on Disney's performance for the 2023 calendar year is that it was a serial disappointment at the box office. It was the first year since 2015 that its theatrical release slate wasn't the highest-grossing collection of movies in theaters. Disney was off to a rough start in 2024 -- by design -- but the pipeline is finally starting to flow again.
After holding back on major releases, Disney's Kingdom of Planet of the Apes was the most popular film in its debut weekend. The flick put out by its 20th Century Studios generated $56.5 million in ticket sales domestically and an international total of $129 million. In just three days it has already nearly tripled the stateside ticket sales of its previous top draw of 2024.
Receiving generally strong reviews by critics and fans alike, the film should continue to woo moviegoers in the next few weeks. The popcorn should keep popping long after the movie completes its cinematic run. Thankfully for the House of Mouse, it has a full lineup of potential blockbusters on the way. It has a big release happening every month this summer.
- June 14: Inside Out 2
- July 26: Deadpool & Wolverine
- Aug. 16: Alien: Romulus
These are all major franchises for Disney. The previous entries in all three properties were big hits, and as sequels they benefit from established fan bases anticipating the release dates. Disney should have nothing but good news on this front when it reports its fiscal third-quarter results in August.
Image source: Disney.
2. Disney World is getting an early surprise
A successful Hollywood premiere isn't the only positive news breaking on Sunday night. During a Disney-themed American Idol on Sunday night, the House of Mouse revealed that Tiana's Bayou Adventure will open on June 28. The ride was initially slated to open in late 2024, and then revised to a general summer opening.
An early summer opening won't just come as a relief to park guests looking to cool off as the temperatures spike in June. This is also the start of the historically busy summer season. With Disney warning last week of challenging comparisons at its most visited resort this quarter, the arrival of Tiana's Bayou Adventure should send more summer travelers its way just as the period is coming to a close. Once again, Disney will have a good reason to have a rosier outlook when it reports financial results again in August.
3. The stock is getting cheaper as profit targets head higher
Lost in last week's slide is that Disney produced another double-digit-percentage beat on the bottom line. An upbeat outlook for the entire fiscal year finds analysts once again bumping their earnings projections higher.
The entertainment stock bellwether may have hit a three-month low last week, but in those same three months Wall Street pros went from expecting a fiscal 2024 profit of $4.57 a share to $4.73 a share. With the upward revision, Disney stock kicks off this new trading week fetching just 22 times this fiscal year's adjusted earnings target. The multiple drops to 19 if you look out to the new fiscal year that begins in October.
Things can bet better even with its streaming business already surprising the market last week with its first profitable quarter. Its languishing studio appears to be getting back on track and maybe this summer won't be a dud after all for Disney. The news is getting better. The upticks should follow.
