Disney's Financial Performance: A Mixed Bag Of Results And Optimism

The Walt Disney Company DIS has released its financial results for the first quarter of fiscal 2024, and the figures present a complex picture of the entertainment giant's current standing and future prospects.

Revenue Remains Steady

Disney's revenues for the quarter stood at $23.5 billion, virtually unchanged from the prior-year quarter. This stagnation in revenue growth indicates that while the company has maintained its income stream, it has not managed to push the needle significantly in terms of sales.

Margins Show Improvement

Despite the flat revenue, Disney's margins have seen a positive shift. The income before income taxes saw a substantial increase of 62%, from $1.773 billion in the prior-year quarter to $2.871 billion. This suggests that Disney has been successful in controlling costs or improving the profitability of its operations.

Earnings On The Rise

Earnings have also seen a notable uptick. Diluted earnings per share (EPS) for the quarter increased from $0.70 in the prior-year quarter to $1.04, marking a 49% rise. Excluding certain items, diluted EPS increased from $0.99 to $1.22, a 23% improvement. 

Free Cash Flow Swings Positive

Free cash flow, a critical indicator of financial health, showed a dramatic improvement. From a negative $2.155 billion in the prior-year quarter, free cash flow swung to a positive $886 million. This turnaround suggests that Disney is generating more cash from its operations after accounting for capital expenditures.

Share Count And Repurchase Program

Disney's share count remains stable, with no significant increase reported. However, the Board of Directors approved a new share repurchase program effective February 7, 2024, targeting $3 billion in repurchases for fiscal 2024. This move could potentially reduce the number of shares outstanding and signal confidence in the company's valuation.

Guidance Signals Confidence

Disney's guidance for the future is optimistic. The company expects full-year fiscal 2024 earnings per share, excluding certain items, to increase by at least 20% to approximately $4.60. Additionally, Disney anticipates free cash flow generation in fiscal 2024 to total roughly $8 billion. The company also expects to reach profitability in its combined streaming businesses by the fourth quarter of fiscal 2024.

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