Disney Stock Has a Lot to Prove This Week

It's time to see how much cheese the House of Mouse scored over the past few months. Walt Disney (NYSE: DIS) reports its fiscal first-quarter results on Wednesday morning. It should be another period of modest top-line growth and healthy bottom-line improvement, but don't expect the same kind of fireworks Disney launched into the air last February.

Disney had a proxy battle on its hands a year ago against two different activist groups ahead of its April annual shareholder meeting. This would be its last quarterly earnings call to woo investor support, and it made headlines beyond just a solid financial showing.

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• Disney announced that its annualized cost savings by the end of fiscal 2024 would top its earlier ambitious goal $7.5 billion.
• In the peak of Taylor Swift mania, Disney+ started streaming the theatrically popular Taylor Swift: The Eras Tour concert film in March.
• The board cleared the path for up to $3 billion in share buybacks, its first repurchase since fiscal 2018.
• After a history of falling short on the gaming front, Disney made a $1.5 billion investment in Fortnite developer Epic Games.
• Disney raised its semiannual dividend by 50%, just months after bringing back its payouts since suspending its distributions at the start of the pandemic.
• A Disney+ animated series based on Moana was fleshed out into a full-length theatrical feature. Moana 2 was one of just three movies coming out in the 2024 calendar year to top $1 billion in worldwide box office receipts. Scoring bonus points, all three films were Disney movies.

The stock jumped 12% the following trading day after the fiscal first-quarter results were unveiled. That will be a hard act for Disney to follow a year later. But that doesn't mean this week's report won't move the needle. Let's take a closer look.

The bare necessities

Disney seems to be rolling right now. The stock bounced back in 2024 after three straight years of falling well short of the market. Despite its return to multiplex dominance and Disney+ profitability, expectations are tame for the fresh financials that will be announced before the market opens on Monday.

Analysts see revenue rising 4% to $24.55 billion for the seasonally potent three months ending in December. That small step isn't a deal-breaker. Revenue growth was actually flat for the prior year's blowout fiscal first quarter. In fact, this will be Disney's seventh straight report of single-digit top-line growth.

There are some good reasons for the meandering revenue results. Rival Comcast (NASDAQ: CMCSA) just posted a 2% top-line increase for the same period, and that included flat results for its theme parks business. Disney's domestic gated attractions have also been marching in place. Gains for Disney's studio business and Disney+ will probably be partly offset by the steady retreat of its legacy linear networks segment. It's troublesome that analysts were holding out for a 5% year-over-year jump in revenue a month ago, but this is largely a bottom-line growth story now.

The profitability of Disney's streaming operations and improvements elsewhere should deliver another quarter of double-digit growth for its adjusted earnings. Wall Street pros are expecting the adjusted profit to climb 17% to $1.43 per share. Disney exceeded analysts' expectations on the bottom line consistently through fiscal 2024. Can it keep the welcome trend going in fiscal 2025?

Image source: Disney.

Be prepared

A Disney financial update is rarely just about the numbers. Disney puts out slides with every quarterly report, complete with any new or revised debut dates for content and theme park attractions. Last year, investors saw how a simple move to turn an upcoming Disney+ animated series into a theatrical release culminated with a $1 billion blockbuster that will eventually work its way to the streaming platform.

Will Disney provide any insight on CEO Bob Iger's succession strategy or how it plans to compete with Comcast when its Epic Universe theme park opens in Florida three months from now? Can the entertainment bellwether shed some more light on the surprising discontinuation of its Venu Sports partnership? Disney doesn't have to answer any or all of these questions, but shareholders will feel a lot more enlightened later this week. It helps that there's no proxy battle drama this time around.

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Rick Munarriz has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.