Disney+ Subscriber Loss and More: Key Earnings Reports to Watch

Disney earnings

US stocks are in for a volatile start to the week as the strong jobs report from last Friday has raised expectations for further rate hikes from the Federal Reserve. Meanwhile, major tech companies such as Apple (NSD:AAPL), Alphabet (NSD:GOOGL), and Amazon (NSD:AMZN) have delivered weak results this week, resulting in job cuts for some, like Dell. The softening consumer demand and ad spending may impact game developers and Walt Disney as they report this week.

Here are the highlights to watch for next week:

Monday: Take Two and Activision Blizzard will report after the market close. Take Two’s shares have been affected by delays in video game titles and weak outlooks from other companies. Investors will be watching to see if they can bring their mobile business back to growth. Activision Blizzard’s deal with Microsoft is under antitrust probes, with approval needed from multiple jurisdictions, including the US, Europe, and the UK’s Competition and Markets Authority. The company is expected to report more than 20% growth in EPS and bookings after three quarters of contraction, but there is also concern about the impact of the expiration of its agreement with NetEase to publish its titles in China.

Tuesday: Chipotle will report after the close. Despite the high number of job cuts in January, Chipotle announced that it is hiring more than 15,000 workers in the US. The Tex-Mex fast food chain is expected to have mid- to high-single digit same-store sales growth and a restaurant-level margin slightly above 25%. Management has expressed optimism about traffic recovery in 2023.

Wednesday: Walt Disney (NYE:DIS) will report after the close. CEO Bob Iger’s return and the proxy battle with activist investor Nelson Peltz have set the stage for a potentially exciting earnings day. The company is projected to post its biggest year-on-year adjusted EPS decline in two years and a small Disney+ subscriber loss. Management is expected to offer details on cost-cutting measures and may withdraw subscriber targets for 2024 in favor of content creation and profitability. Disney is also said to be exploring more licensing of its film and television series to rival media outlets.

Thursday: PayPal (NSD:PYPL) will report after the close. The payment platform recently cut 2,000 jobs and investors will be watching for its first take on full-year guidance. Revenue is projected to reach $30 billion for the first time in 2023, but there is “modest risk” to the projection from the slowdown in spending.

Friday: Newell Brands will report before the market open. The company, which makes Sharpie pens and Crock-Pot cookers, is expected to see a worsening year-on-year decline in revenue for the fourth quarter and the biggest contraction in adjusted EPS in 14 years. Raymond James pointed out that increased focus on productivity and cost-cutting measures could help offset challenges in a time of sluggish demand.

Overall, investors will be watching these earnings reports closely to see how companies are responding to the challenges posed by the pandemic and the state of the economy.

Walt Disney Company Stock Analysis:

The Walt Disney Company’s stock price has seen quite a bit of movement in the last year, with a -22.05% decline. The last closing price of the stock was USD 110.71. Over the past week, the stock has changed by +1.17%, while over the last month it has risen by 18.79%. 19 analysts have provided stock forecasts for Walt Disney Company over the next 12 months, with an average target price of USD 130.70. The company’s average analyst ratings is Strong Buy, while Stock Target Advisor’s own analysis of Walt Disney Company is Bullish, based on 10 positive signals and 4 negative signals.

What we like:

High market capitalization

This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.

Superior risk adjusted returns

This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.

Low volatility

The stock’s annual returns have been stable and consistent compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile. Although stability is good, also keep in mind it can limit returns.

Superior return on equity

The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

 

What we don’t like:

Below median total returns

The company has under performed its peers on annual average total returns in the past 5 years.

Below median dividend returns

The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.

Overpriced compared to earnings

The stock is trading high compared to its peers on a price to earning basis and is above the sector median.

Overpriced compared to book value

The stock is trading high compared to its peers median on a price to book value basis.

Overpriced on cashflow basis

The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

Poor capital utilization

The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers.

Poor return on assets

The company management has delivered below median return on assets in the most recent 4 quarters compared to its peers.

Overpriced on free cash flow basis

The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

Low Earnings Growth

This stock has shown below median earnings growth in the previous 5 years compared to its sector.

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