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How Badly will the Coronavirus Hurt Disney's Earnings Results?
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Disney (DIS - Free Report) is scheduled to release its Q2 fiscal 2020 financial results on Tuesday, May 5. Wall Street will be watching the entertainment conglomerate closely as the coronavirus brings many of its key businesses such as parks and theatrical releases to a halt.
Disney & the Coronavirus
Disney was forced to close its parks in Shanghai and Hong Kong long before the coronavirus turned into a global pandemic. Since then, it has closed both Disney World in Florida and Disneyland in California. Worse yet, it’s unclear when its flagship U.S. parks and resorts will be able to reopen given the current social distancing push.
Meanwhile, movie theaters are closed. This has forced Disney to postpone release dates on what it assumed would be blockbuster hits such as Mulan and Black Widow. The firm, like everyone else in Hollywood, is also set to experience serious production delays, which is sure to impact its release schedule.
On top of that, live sports have been off TV for weeks and no one knows when they will return. On top of its ESPN worries, Disney stores are also closed. All of this puts a ton of pressure on its new streaming TV service.
Investors should be happy to note that Disney+ said in early April that it hit 50 million global paid subscribers, up more than 21 million since early February—the platform officially launched in November 2019.
Disney+ is still far behind industry leader Netflix (NFLX - Free Report) , but the early numbers show its promise and ability to compete in a competitive space alongside the current streaming leader, AT&T (T - Free Report) , Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , and others. That said, the production halt will also likely negatively impact Disney+ programing.
Outlook
Before we look ahead, it is worth pointing out that DIS stock has bounced back 20% from its March 23, which does lag the S&P 500’s 25% comeback. Overall, Disney shares are down 21% in the last 12 months. DIS also fell 3.6% during regular trading Thursday to $108.15 a share, which puts its about 30% off its 52-week highs.
Moving on, our current Zacks estimates still call for Disney’s Q2 revenue to jump around 21% to reach $18.03 billion. But this figure is boosted by the inclusion of its Fox deal and its Hulu ownership, which were included for the first time in Q3 of fiscal 2019.
For instance, Disney’s Q1 2020 revenue climbed 36%, with Q4 and Q3 FY19 up 34% and 33%, respectively. And its second quarter fiscal 2019 sales popped just 3%. That said, Disney’s third quarter revenue is projected to tumble 20% from the year-ago period.
At the bottom end of the income statement, Disney’s adjusted Q2 earnings are projected to plummet 48.5% to $0.83 a share. And things look set to get far worse next quarter, with its adjusted EPS figure projected to fall 107% to a loss of -$0.09 a share.
Bottom Line
Disney’s earnings revision picture has turned far worse recently, with its Q3 estimate down 107% from where it was 60 days ago and its fiscal 2020 estimate 47% lower. This helps DIS earn a Zacks Rank #4 (Sell) at the moment. Investors should also note that the overall earnings picture for the S&P 500 continues to deteriorate rapidly, especially for the second quarter (also read: The Coronavirus Pandemic and its Impact on Corporate Earnings).
Some people might want to scoop up Disney stock at a discount, but it is likely best to at least wait until after it reports its results on May 5 for more clarity on when things might start to return to something close to normal.
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How Badly will the Coronavirus Hurt Disney's Earnings Results?
Disney (DIS - Free Report) is scheduled to release its Q2 fiscal 2020 financial results on Tuesday, May 5. Wall Street will be watching the entertainment conglomerate closely as the coronavirus brings many of its key businesses such as parks and theatrical releases to a halt.
Disney & the Coronavirus
Disney was forced to close its parks in Shanghai and Hong Kong long before the coronavirus turned into a global pandemic. Since then, it has closed both Disney World in Florida and Disneyland in California. Worse yet, it’s unclear when its flagship U.S. parks and resorts will be able to reopen given the current social distancing push.
Meanwhile, movie theaters are closed. This has forced Disney to postpone release dates on what it assumed would be blockbuster hits such as Mulan and Black Widow. The firm, like everyone else in Hollywood, is also set to experience serious production delays, which is sure to impact its release schedule.
On top of that, live sports have been off TV for weeks and no one knows when they will return. On top of its ESPN worries, Disney stores are also closed. All of this puts a ton of pressure on its new streaming TV service.
Investors should be happy to note that Disney+ said in early April that it hit 50 million global paid subscribers, up more than 21 million since early February—the platform officially launched in November 2019.
Disney+ is still far behind industry leader Netflix (NFLX - Free Report) , but the early numbers show its promise and ability to compete in a competitive space alongside the current streaming leader, AT&T (T - Free Report) , Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , and others. That said, the production halt will also likely negatively impact Disney+ programing.
Outlook
Before we look ahead, it is worth pointing out that DIS stock has bounced back 20% from its March 23, which does lag the S&P 500’s 25% comeback. Overall, Disney shares are down 21% in the last 12 months. DIS also fell 3.6% during regular trading Thursday to $108.15 a share, which puts its about 30% off its 52-week highs.
Moving on, our current Zacks estimates still call for Disney’s Q2 revenue to jump around 21% to reach $18.03 billion. But this figure is boosted by the inclusion of its Fox deal and its Hulu ownership, which were included for the first time in Q3 of fiscal 2019.
For instance, Disney’s Q1 2020 revenue climbed 36%, with Q4 and Q3 FY19 up 34% and 33%, respectively. And its second quarter fiscal 2019 sales popped just 3%. That said, Disney’s third quarter revenue is projected to tumble 20% from the year-ago period.
At the bottom end of the income statement, Disney’s adjusted Q2 earnings are projected to plummet 48.5% to $0.83 a share. And things look set to get far worse next quarter, with its adjusted EPS figure projected to fall 107% to a loss of -$0.09 a share.
Bottom Line
Disney’s earnings revision picture has turned far worse recently, with its Q3 estimate down 107% from where it was 60 days ago and its fiscal 2020 estimate 47% lower. This helps DIS earn a Zacks Rank #4 (Sell) at the moment. Investors should also note that the overall earnings picture for the S&P 500 continues to deteriorate rapidly, especially for the second quarter (also read: The Coronavirus Pandemic and its Impact on Corporate Earnings).
Some people might want to scoop up Disney stock at a discount, but it is likely best to at least wait until after it reports its results on May 5 for more clarity on when things might start to return to something close to normal.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>