Why Is Disney (DIS) Down 5.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Walt Disney (DIS). Shares have lost about 5.9% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Disney due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Disney Q1 Earnings Surpass Estimates, Revenues Increase Y/YThe Walt Disney Company reported first-quarter fiscal 2025 adjusted earnings of $1.76 per share, which beat the Zacks Consensus Estimate by 22.2% and increased 44.3% year over year.Revenues rose 4.8% year over year to $24.69 billion and beat the consensus mark by 0.1%.Segment DetailsMedia and Entertainment Distribution revenues (44% of revenues) increased 8.9% year over year to $10.87 billion.Revenues from Linear Networks declined 6.6% year over year to $2.61 billion. Direct-to-Consumer revenues increased 9.5% year over year to $6.07 billion. Content Sales/Licensing and Other revenues grew 33.8% year over year to $2.18 billion.Parks, Experiences and Products revenues (38.1% of revenues) rose 3.1% year over year to $9.41 billion. Domestic revenues were $6.43 billion, up 2.1% year over year. International revenues increased 11.5% year over year to $1.64 billion in the reported quarter. Meanwhile, revenues from Disney’s Consumer Products decreased 1.6% year over year to $1.33 billion.Subscriber DetailsAs of Dec. 28, 2024, Disney+ had 124.6 million paid subscribers compared with 122.7 million as of Sept. 28, 2024. Domestic Disney+ average monthly revenue per paid subscriber increased from $7.7 to $7.99 due to increases in prices, partially offset by higher mix of subscribers to promotional offerings.International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $6.78 to $7.19 due to increases in prices and higher advertising revenues, partially offset by a higher mix of subscribers to promotional offerings.Hulu SVOD Only average monthly revenue per paid subscriber was comparable to the prior sequential quarter as lower advertising revenues were offset by increases in prices and higher mix of subscribers to multi-product offerings.Operating DetailsCosts & expenses remained flat year over year at $20.61 billion in the reported quarter.Segmental operating income was $5.06 billion, up 30.5% year over year.Media and Entertainment Distribution’s segmental operating income surged 94.9% year over year to $1.7 billion due to improved results at Direct-to-Consumer and Content Sales/Licensing and Other, partially offset by a decrease at Linear Networks.Linear Networks’ operating income declined 11.2% to $1.09 billion. Domestic operating income remained flat year over year due to higher advertising revenues due to an increase in rates, partially offset by lower affiliate revenues attributable to fewer subscribers.Direct-to-Consumer operating income was $293 million against the year-ago quarter’s loss of $138 million, primarily owing to subscription revenue growth attributable to higher rates due to increases in retail pricing across the company’s streaming services and subscriber growth.Content Sales/Licensing and Other operating income were $312 million against an operating loss of $224 million reported in the year-ago quarter. The increase in operating results was due to higher theatrical distribution results reflecting the strong performance of Moana 2. The current quarter also included Mufasa: The Lion King while the prior-year quarter included The Marvels and Wish.Parks, Experiences and Products’ operating income was $3.11 billion, up 0.2% year over year. The Domestic segment reported an operating income of $1.98 billion, down 4.6% year over year unfavorably impacted by Hurricane Milton and to a lesser extent, Hurricane Helena. Also, higher costs primarily due to the fleet expansion at Disney Cruise Line and inflation negatively impacted the segment’s operating results.The International segment reported an operating income of $420 million, up 28% year over year, driven by growth in guest spending and higher volumes attributable to an increase in attendance.Consumer Products’ operating profit increased 1.1% year over year to $708 million.Balance SheetAs of Dec. 28, 2024, cash and cash equivalents were $5.48 billion compared with $6 billion as of Sept. 28, 2024.Total borrowings (including the current portion of borrowings) were $45.3 billion as of Dec. 28, 2024, compared with $45.81 billion as of Sept. 28, 2024.Free cash flow was $739 million in the reported quarter.GuidanceFor fiscal 2025, Disney expects high-single digit adjusted EPS growth compared to fiscal 2024. The company expects more than $15 billion in cash provided by operations.In Entertainment, the company expects double-digit percentage segment operating income growth compared to fiscal 2024. Disney projects Entertainment DTC operating income of approximately $875 million versus fiscal 2024.The company expects a modest decline in the second quarter of fiscal 2025 Disney+ Core subscribers versus the first quarter of fiscal 2025. For Sports, Disney expects    Segment    operating    income    adversely    impacted by    approximately    $100    million    due    to college    sports    and    one    additional NFL    game,    and    about    $50    million    from    exiting    the    Venu    Sports JV.In Experiences, Disney expects Disney    Cruise    Line    pre-opening    expense    of approximately    $40    million.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -7.66% due to these changes.VGM ScoresAt this time, Disney has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Disney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Walt Disney Company (DIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks