Disney (DIS) to report third quarter results: here’s what to expect

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The Walt Disney Company DIS is expected to release its results for the third quarter of fiscal 2021 on August 12, after the market closes. The House of the Mouse suffered massive losses during the pandemic when its major theme parks, cruises and hotels were forced to close. However, the reopening efforts brought several enthusiasts back into the reportable quarter. Along with that, Disney’s best releases and an array of series in Disney + have likely increased its revenue.

Reopening of the park and subscribers to boost the top line

The Walt Disney World Resort and Disneyland Park in Florida and California eased restrictions in April, boosting theme park attendance. There were reports of long lines in front of Space Mountain, Tomorrowland and Epcot. However, with capacity restrictions still in place, attendance is still not peaking.

Nonetheless, Disney + had kept the Mouse House afloat during the pandemic, and viewers were hooked on its lineup of series and films in the quarter to report. The conglomerate comfortably increased subscription costs from $ 7 per month in March to $ 8 in April, a growing source of revenue, which should no doubt be reflected in the results for the quarter to be released, bolstering Disney’s confidence in its streaming offers. And why not? Disney’s Marvel Studio & Pixar have been producing fan favorite hits since the infinity sagaand in the neighborhood, fans stuck on series like The Falcon and the Winter Soldierand Loki. Disney also released Cruel in theaters and on Disney + Premier Access on May 28, and Pixar’s Lucadirectly on Disney + on June 13.

As of April 3, Disney + had 103.6 million paying subscribers just 18 months after its launch, and chief executive Bob Chapek predicts an additional 230-260 million subscribers by 2024. Analysts expect the Disney + subscriber count reaches 113 million in the next quarter. .

Zacks’ consensus estimate for this company Zacks Rank # 3 (Hold) is set at $ 16.82 billion, suggesting 42.8% year-over-year growth, with expected earnings of 57 cents per share, calling for a 612.5% year-over-year jump. can see The full list of today’s Zacks # 1 Rank (Fort Buy) stocks here.

Factors to be weighed

While Disney’s arsenal of theme parks, cruise ships, and blockbuster movies have been strong in the past, the pandemic has caused immense damage to its revenue. The Fleet segment represented around 38% of revenue (for the fiscal year ended September 28, 2019) and despite reopening initiatives with capacity limitations, the revenue contribution fell to 21% in the first six months of this year . The rise in the number of cases of delta variants forced Disney to reinstate the mandate of indoor masks for visitors, which ultimately led to a decline in park activity. Disney’s cruise line is also suffering huge losses, as operations remained closed during the quarter.

While the streaming service has the potential to boost profits, the Mouse House still relies heavily on theme park operations. Stay-at-home restrictions are gradually easing globally, and streaming companies are struggling to attract subscribers. Disney’s closest competitor in the streaming line, Netflix, Inc. NFLX, added 1.54 million paying subscribers worldwide in the second quarter of 2021. As the number of new subscribers exceeded the consensus estimate of 1.19 million, it is well below the 3.98 million of the previous quarter. , which could not meet expectations.

Summary

While reopening efforts will surely increase revenues in the parks and hotels segment, the setbacks associated with limited operations and capacity restrictions, the closure of cruise services and low box office releases will be reflected in the report on results.

Investors are also concerned about increased competition from streaming, and it’s likely that many subscribers have already joined other services like AT&T Inc.’s T HBO Max and Comcast Corporation’s CMCSA Peacock, which may have impacted Disney’s all-inclusive revenue in the reportable quarter. The stock has lost 2.3% so far this year despite an all-time high in March.

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