Reports fourth quarter 2020 earnings on Thursday, November 12, after the close
Expected Revenue: $ 14.15 Billion
EPS Expectation: – $ 0.73
The strong resurgence of Disney (NYSE 🙂 stocks since the March low makes it easy to conclude that investors have already begun to anticipate a return to normal life in the entertainment giant's theme parks, cinemas and cruise ships. .
After its stock plummeted more than 40% as the coronavirus outbreak gained momentum, Disney shares are up nearly 61% since its close of $ 137.82 yesterday. This gradual and strong recovery clearly shows that investors see no permanent damage to Disney & # 39; s cash-producing businesses after the pandemic robbed the company of much of its operating profit.
Is this level of confidence justified if we are still in the midst of this deadly global health crisis? Investors get a fresh look at earnings – and an updated response – when the Burbank, California-based company releases its fourth quarter report and provides guidance for the fiscal year ahead.
But if you start from the business power, there's little reason to be happy. Disney Continues to Suffer From the COVID-19 Pandemic; the parks and studio entertainment segments continue to record significant losses. The pandemic also forced the company to lay off 28,000 employees in the parks, experiences and consumer products division in late September.
Hit To Operating Profit
Operating profit, which is normally driven by the company's theme parks and cable TV networks, such as ESPN, which fell 98% in the three months to and June 27 compared to a year earlier. For the quarter ended September 30, analysts expect the company to record a loss of $ 0.73 per share on revenues of $ 14.15 billion.
But all this is already in the past. To successfully transition into a changed world after a pandemic, Disney is quickly adjusting its priorities and investors are getting excited about the company's new direction. Last month, the House of Mouse announced a major shake-up in its operations with the aim of shifting focus to its newly launched streaming company, Disney +.
The global entertainment colos puts its TV networks, film studio and direct-to-consumer divisions under the umbrella of the Media and Entertainment segment. Existing content chefs will continue to oversee their businesses, but they will now also be able to directly choose which movies and TV shows air on Disney's growing array of streaming services.
Disney & # 39; s largest shareholders, such as Dan Loeb of Third Point, welcomed the company's new direction, prioritizing its streaming business. "We are pleased to see that Disney is focused on the same opportunity that makes us such avid shareholders," Loeb said in an emailed statement quoted by Bloomberg News.
The global home environment has boosted the company's Disney + streaming service, which is thriving and becoming a threat to other players in the industry. Disney has signed up more than 60 million users in nearly nine months, a benchmark that took about eight years for Netflix (NASDAQ 🙂 to hit it.
Bottom Line
Disney & # 39; s largest revenue-generating units are under severe pressure from the pandemic and there is no rapid way back to normal. That said, the coronavirus pandemic has accelerated the shift to home streaming entertainment, and Disney appears to be in a perfect position to capitalize on it.
