Disney Q2 Earnings Preview: Analyst Estimates, Disney+ Versus Rivals, Dividend Talk, DeSantis Battle And More

Media giant The Walt Disney Company DIS is set to report second-quarter financial results after market close Wednesday. Here's an overview of analyst expectations, key factors they're monitoring, and additional aspects for investors to keep an eye on.

Earnings Estimates: Analysts expects Disney to report revenue of $19.43 billion for the second quarter, according to data from Benzinga Pro.

Estimates call for earnings per share of 83 cents in the second quarter.

Disney has beaten revenue estimates in six of the last seven quarters. The company reported first-quarter revenue of $23.37 billion previously and had revenue of $18.88 billion in the second quarter of last year.

The company has beaten earnings per share estimates in four of the last five quarters. The company reported earnings of 99 cents in the first quarter and had earnings of $1.08 in the second quarter of last year.

Related Link: Disney Subscribers, Cost Cuts, Park Growth, What's The Biggest Item For Disney Analysts 

Disney+ Subscribers A Key Item: In the first quarter, a key item was the company’s direct-to-consumer revenue, which includes the Disney+ streaming platform. DTC revenue was $5.31 billion in the first quarter, up 13% year-over-year.

The company reported 46.4 million domestic Disney+ subscribers in the quarter and a total of 161.8 million Disney+ subscribers. The total grew domestically, but came down overall as there were fewer international subscribers on the Disney+ Hotstar plan.

Investors and analysts will likely be looking for the number of subscribers to rise, as rivals have seen increases in their streaming subscriber figures. Another focus area for investors will be the comments made on the profitability of the streaming business.

CEO Bob Iger said that the company was doing work to “lead to sustained growth and profitability for our streaming business” in the first quarter.

Disney added an ad-tier to its Disney+ platform in December. Analysts and investors will be looking for comments on the impact of these changes on acquiring new subscribers, retaining existing ones, and whether current subscribers switched to the ad-tier, considering it had the same price point as the original plan. Comments on potential price increases, which Iger has alluded to previously, could also be watched.

Netflix Inc NFLX ended the first quarter with 232.5 million global paid subscribers, up 4.9% year-over-year. The company added 1.75 million net new paid subscribers in its first quarter.

Warner Bros. Discovery WBD, which is undergoing a rebranding of its streaming platforms to Max, saw direct-to-consumer revenue decline 1% to $2.46 billion in its most recent quarter. The company added 1.6 million global direct-to-consumer subscribers in the quarter. The company also said it now expects its U.S. DTC business to be profitable in 2023, a year ahead of previous guidance.

Paramount Global PARAPARAA saw Paramount+ streaming subscribers increase by 4.1 million in its most recently reported quarter to a total of 60 million. The company also reported that global viewing hours for its streaming platforms Paramount+ and PlutoTV were up 50% year-over-year in the quarter.

Given the subscriber additions by other streaming companies, investors and analysts will likely want to see Disney report gains for Disney+.

Other Items to Watch: Disney announced in the first quarter it would be slashing 7,000 positions and reorganizing into three new divisions. An update on the job cuts and the new divisions could be an item to watch.

Outside the media segment, Disney continues to see a rebound in its Parks, Experiences & Products division. In the first quarter, revenue for the segment was $8.74 billion, up 21% year-over-year. Domestic and international parks were each up 27% year-over-year in the first quarter.

Higher guest numbers and guest spending was a key factor in the first quarter and will be watched by investors in the second quarter report, as February can be one of the slowest months at several of the company’s theme parks.

While streaming has grown, the linear television segment has struggled. In the first quarter, revenue was $7.29 billion for the segment, down 5% year-over-year.

The elephant in the room (that will likely be addressed) is the ongoing battle between Disney and Florida Governor Ron DeSantis. The battle has gone back and forth for months and now includes several lawsuits. Analysts and investors will be eager to hear Iger's perspective on the current state of the conflict and gauge Disney's confidence in being victorious in the battle.

Another item to watch is the potential for the reinstatement of Disney’s dividend. Disney stopped paying a dividend in 2020 after previously paying out semi-annual dividends. The move was perceived as a way to help the company preserve cash during the COVID-19 pandemic. Commentary from management suggested the dividend would eventually return, and 2023 has been seen as a potential timeline.

DIS Price Action: Disney shares are trading 1.36% lower at $100.68 on Wednesday, versus a 52-week trading range of $84.08 to $126.48.

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