Disney (NYSE:DIS) will report its results for the first quarter of fiscal year 2020 after trading on Tuesday, and the results are likely to impress. That said, it could end up being a great couple of days or weeks for Disney stock.
Investors will be looking closely at the signup rate for Disney’s new streaming service, Disney+. This will be the first time Disney has reported on the $4.99 monthly streaming service since its launch in November. Investors expect up to 25 million domestic subscribers to be reported, on top of the company’s two other streaming services — Hulu and ESPN+.
Disney+ will need to reach over 60 million domestic subscribers to catch up to Netflix’s (NASDAQ:NFLX) numbers — and 167 million worldwide. Meanwhile, Hulu already has 28.5 million subscribers, and analysts will also be focusing on its growth rate as well. Disney recently restructured Hulu and 21st Century Fox movie studio so that their executives report directly to Disney’s respective heads.
Furthermore, Disney expects to reach profitability with its streaming services by 2024, according to one Morgan Stanley analyst. The company has recently moved up its Disney+ launch in Western Europe to March 24 from the end of the month.
Overall, all indications point to the product resonating with subscribers, especially since the subscription price is so low.
Coronavirus Fears May Hurt Disney Stock
Investors are also worried that the coronavirus outbreak might hurt the company’s prospects for 2020. All eyes are going to be on what the company indicates the impact of the shutdown of Disney’s parks in China will be.
In addition, the shutdown of all movie theaters in China will likely have a dramatic effect on Disney and Disney stock results, as well.
Expected Earnings for Disney
Analysts are expecting this quarter’s earnings-per-share (EPS) profits of $1.46, compared to $1.84 earned in the same quarter last year. Furthermore, revenue is forecast to come in at $20.783 billion, beating out the $15.303 billion figure from last year.
Also, analysts polled by Seeking Alpha are expecting EPS of $1.44 and revenue of $20.84 billion for the quarter. Similarly, Barron’s reports that analysts are expecting EPS of $1.47 and $20.8 billion in revenue.
Earnings last quarter were $1.07 per share on an adjusted basis, significantly higher than analysts’ expectations of 95 cents per share. That was important because Disney’s earnings for last quarter were 28% lower than the prior year.
Analysts are hoping that Disney will impress again with higher than expected results as it did last quarter. Which, ultimately, will push Disney stock higher.
Disney Stock Performance Flat in the Past Six Months
Collectively, Disney stock has been flat for the past six months. It now trades for 23 times forward earnings and has a 1.27% dividend yield. Investors are looking for earnings to impress in order to move the stock forward.
Over the past 12 months, DIS stock through this past Friday’s close has returned 26%, including dividends. This compares with 24% for the S&P 500 and 18% from the Dow Jones Industrial Average.
Most analysts are bullish on Disney stock, with 74% of them rating the stock with a Buy or its equivalent. Moreover, the average price target is $158.33, which is about 10% above its current price.
As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide which you can review here. The Guide focuses on high total yield value stocks. Subscribers a two-week free trial.