|
Related Topics
|
Category: Stock Market and Walt Disney (DIS)
Date: 17 May 2021 Stock Price of Walt Disney (DIS): $173.70 Market Capital of Walt Disney (DIS): $315 billion We take a look at entertainment giant Walt Disney's financial results for the 2nd quarter of their 2021 fiscal year. The group's stock was punished after the release of the results as the market was disappointed with their streaming service subscriber numbers.
|
We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the Company- Bob Chapek, Chief Executive Officer, The Walt Disney Company."
About The Walt Disney Company (DIS)
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with the following business segments: Media Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer and International.
Media Networks is the primary unit of The Walt Disney Company that contains the company’s vast array of television networks, cable channels, associated production and distribution companies, and owned and operated television stations across two divisions – Walt Disney Television and ESPN.
Parks, Experiences and Products is the global hub that brings Disney’s stories, characters, and franchises to life through theme parks and resorts, cruise and vacation experiences, and consumer products—everything from toys to apparel, and books to video games.
For over 90 years, The Walt Disney Studios has been the foundation on which The Walt Disney Company was built. Today, the Studio brings quality movies, music and stage plays to consumers throughout the world. (Studios include Pixar- known for their animation movies) and Marvel Studios, 20th Century Fox and LucasFilms (Star wars movies)
Media Networks is the primary unit of The Walt Disney Company that contains the company’s vast array of television networks, cable channels, associated production and distribution companies, and owned and operated television stations across two divisions – Walt Disney Television and ESPN.
Parks, Experiences and Products is the global hub that brings Disney’s stories, characters, and franchises to life through theme parks and resorts, cruise and vacation experiences, and consumer products—everything from toys to apparel, and books to video games.
For over 90 years, The Walt Disney Studios has been the foundation on which The Walt Disney Company was built. Today, the Studio brings quality movies, music and stage plays to consumers throughout the world. (Studios include Pixar- known for their animation movies) and Marvel Studios, 20th Century Fox and LucasFilms (Star wars movies)
Overview of The Walt Disney Company's 2nd quarter 2021 earnings report
Highlights of their 2nd quarter 2021 fiscal year
Results for the quarter and six months ended April 3, 2021 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Disney Parks, Experiences and Products segment where since late in the second quarter of fiscal 2020, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended.
- Diluted earnings per share (EPS) from continuing operations for the quarter increased to $0.50 from $0.26 in the prior-year quarter. Excluding certain items(1), diluted EPS for the quarter increased 32% to $0.79 from $0.60 in the prior-year quarter.
- EPS from continuing operations for the six months ended April 3, 2021 decreased 64% to $0.52 from $1.43 in the prior-year period. Excluding certain items(1), EPS for the six months decreased 48% to $1.11 from $2.13 in the prior-year period.
- Cash provided by continuing operations $ 1,393 billion
- Free cash flow: $ 623 million
Results for the quarter and six months ended April 3, 2021 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Disney Parks, Experiences and Products segment where since late in the second quarter of fiscal 2020, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended.
The Walt Disney Company management commentary on their 4th quarter 2020 earnings
BURBANK, Calif. – The Walt Disney Company today reported earnings for its second fiscal quarter ended April 3, 2021
“We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the Company,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “This is clearly reflected in the reopening of our theme parks and resorts, increased production at our studios, the continued success of our streaming services, and the expansion of our unrivaled portfolio of multiyear sports rights deals for ESPN and ESPN+.”
Since late in the second quarter of fiscal 2020 and continuing into fiscal 2021, COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at Disney Parks, Experiences and Products segment where our theme parks were closed or operating at significantly reduced capacity and cruise ship sailings and guided tours were suspended. In addition, we have delayed, or in some cases, shortened or canceled, theatrical releases, and stage play performances have been suspended since March 2020 with a limited number of performances returning in the first quarter of fiscal 2021. We have experienced disruptions in the production and availability of content, including the cancellation or shift of key live sports programming from fiscal 2020 into the first quarter of fiscal 2021, as well as the suspension of production of most film and television content. Although most film and television production resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption of film and television production, as well as live sporting events, depending on local circumstances. We have incurred, and will continue to incur, additional costs to address government regulations and implement safety measures for our employees, talent and guests. The timing, duration and extent of these costs will depend on the timing and scope of our operations as they resume. We currently estimate these costs may total approximately $1 billion in fiscal 2021. Some of these costs may be capitalized and amortized over future periods. The most significant impact on operating income in the current quarter from COVID-19 was at the Disney Parks, Experiences and Products segment due to revenue lost as a result of the closures and reduced operating capacities. We estimate an additional $1.2 billion impact on the Disney Parks, Experiences and Products segment operating income compared to the prior-year quarter
“We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the Company,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “This is clearly reflected in the reopening of our theme parks and resorts, increased production at our studios, the continued success of our streaming services, and the expansion of our unrivaled portfolio of multiyear sports rights deals for ESPN and ESPN+.”
Since late in the second quarter of fiscal 2020 and continuing into fiscal 2021, COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at Disney Parks, Experiences and Products segment where our theme parks were closed or operating at significantly reduced capacity and cruise ship sailings and guided tours were suspended. In addition, we have delayed, or in some cases, shortened or canceled, theatrical releases, and stage play performances have been suspended since March 2020 with a limited number of performances returning in the first quarter of fiscal 2021. We have experienced disruptions in the production and availability of content, including the cancellation or shift of key live sports programming from fiscal 2020 into the first quarter of fiscal 2021, as well as the suspension of production of most film and television content. Although most film and television production resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption of film and television production, as well as live sporting events, depending on local circumstances. We have incurred, and will continue to incur, additional costs to address government regulations and implement safety measures for our employees, talent and guests. The timing, duration and extent of these costs will depend on the timing and scope of our operations as they resume. We currently estimate these costs may total approximately $1 billion in fiscal 2021. Some of these costs may be capitalized and amortized over future periods. The most significant impact on operating income in the current quarter from COVID-19 was at the Disney Parks, Experiences and Products segment due to revenue lost as a result of the closures and reduced operating capacities. We estimate an additional $1.2 billion impact on the Disney Parks, Experiences and Products segment operating income compared to the prior-year quarter
The impacts of 2 COVID-19 on our Disney Media and Entertainment Distribution segment, compared to the prior-year quarter, were less significant as lower revenues across film and television distribution windows due to the deferral or cancellation of significant film releases were largely offset by a reduction in the related costs
Direct-to-Consumer
Direct-to-Consumer revenues for the quarter increased 59% to $4.0 billion and operating loss decreased from $0.8 billion to $0.3 billion. The decrease in operating loss was due to improved results at Hulu, and to a lesser extent, at ESPN+. The increase at Hulu was due to subscription revenue growth and higher advertising revenue, partially offset by an increase in programming and production costs driven by higher subscriber-based fees for programming the live television service. Subscription revenue growth was due to an increase in subscribers and, to a lesser extent, higher rates driven by an increase in retail pricing for the Hulu Live TV+ SVOD service in December 2020. Higher advertising revenue was due to increased impressions. The improvement at ESPN+ was driven by subscriber growth and higher income from Ultimate Fighting Championship pay-per-view events. Results at Disney+ were comparable to the prior-year quarter as an increase in subscribers was largely offset by higher programming and production, marketing and technology costs. The increases in subscribers and costs reflected the ongoing expansion of Disney+ including launches in additional markets
Subscriber numbers for Disney+, ESPN and Hulu (compare to the subscriber numbers a year ago and the yea ron year change)
Brand Q2-2021 Q2-2020 Year on year growth
Direct-to-Consumer
Direct-to-Consumer revenues for the quarter increased 59% to $4.0 billion and operating loss decreased from $0.8 billion to $0.3 billion. The decrease in operating loss was due to improved results at Hulu, and to a lesser extent, at ESPN+. The increase at Hulu was due to subscription revenue growth and higher advertising revenue, partially offset by an increase in programming and production costs driven by higher subscriber-based fees for programming the live television service. Subscription revenue growth was due to an increase in subscribers and, to a lesser extent, higher rates driven by an increase in retail pricing for the Hulu Live TV+ SVOD service in December 2020. Higher advertising revenue was due to increased impressions. The improvement at ESPN+ was driven by subscriber growth and higher income from Ultimate Fighting Championship pay-per-view events. Results at Disney+ were comparable to the prior-year quarter as an increase in subscribers was largely offset by higher programming and production, marketing and technology costs. The increases in subscribers and costs reflected the ongoing expansion of Disney+ including launches in additional markets
Subscriber numbers for Disney+, ESPN and Hulu (compare to the subscriber numbers a year ago and the yea ron year change)
Brand Q2-2021 Q2-2020 Year on year growth
- Disney+ : 103.6million 33.5 million >100 %
- ESPN+ : 13.8million 7.9million 75 %
- Hulu: 41.6million 32.1million 30 %
The Walt Disney Company (DIS) stock price chart over the last 5 years
The image below shows The Walt Disney Company's stock price for the last 5 years. And its been a pretty good time for Walt Disney stockholders.Over the last 5 years the stock of Walt Disney increased by 77.6% over the last 5 years.
The stock of Walt Disney is trading a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term momentum and sentiment towards Walt Disney stock is positive right now
The stock of Walt Disney is trading a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term momentum and sentiment towards Walt Disney stock is positive right now
Walt Disney (DIS) stock vs Netflix (NFLX) stock performance over the last 5 years
The image below shows the stock price performance of Walt Disney (DIS) and Netflix (NFLX) over the last 5 years. Both of these firms are active in the entertaining streaming space. The summary below shows the stock price returns of Netflix and Walt Disney over the last 5 years.
The stock of Netflix has easily outperformed that of Walt Disney.
- Netflix : 408%
- Walt Disney: 77.6%
The stock of Netflix has easily outperformed that of Walt Disney.
The Walt Disney Company (NYSE: DIS) stock valuation
So based on Walt Disney's latest earnings report what do we value Walt Disney's stock at? Based on their earnings reported our valuation model provides a target (full value) price for Walt Disney's at $147.70 per stock.
We therefore believe that the stock of Walt Disney's is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $147.70. A good entry price into Walt Disney would therefore be at $132.90 or below.
We expect the stock of Walt Disney to pull back in coming weeks and months to levels closer to our target price (full value price) in coming weeks and months as we believe it is currently overvalued. We therefore rate the stock of Disney (DIS) as a sell
We therefore believe that the stock of Walt Disney's is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $147.70. A good entry price into Walt Disney would therefore be at $132.90 or below.
We expect the stock of Walt Disney to pull back in coming weeks and months to levels closer to our target price (full value price) in coming weeks and months as we believe it is currently overvalued. We therefore rate the stock of Disney (DIS) as a sell
Next earnings release of Walt Disney
The Walt Disney Company is expected to release their 1st quarter 2021 earnings report in early February 2021