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Category: Stock Market and Walt Disney (DIS)
Date: 9 August 2020 Stock Price of Walt Disney: $135.52 We take a look at entertainment giant Walt Disney's financial results for the 4th quarter of their 2020 fiscal year. Has the group's streaming service Disney+ performed to the group's expectations? Revenue declined by -23% for the quarter and they reported a loss of -$710 million.
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Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth -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 4th quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Revenues: $11.799 billion (down from $20.262 billion for the same quarter of the previous year)
- Revenue decreased by -42% over the last 12 months
- Total costs and expenses: $11.728 billion (down from $17.511 billion for the same quarter of the previous year)
- Total cost and expenses decreased by -33% over the last 12 months
- So some margin pressure on Walt Disney, as their revenues declined by more than their cost and expenses
- Net loss attributable to The Walt Disney Company (Disney): -$4.72 billion (down from $1.76 billion for the same quarter of the previous year)
- Diluted loss per share: -$2.61 (down from $0.97 for the same quarter of the previous year)
- PE ratio of Walt Disney : Since Walt Disney is loss making we cannot calculate a PE ratio at this point
- Diluted number of shares in issue: 1.809 billion (up from 1.802 billion for the same quarter of the previous year)
- Cash and cash equivalents: $23.155 billion
- Cash and equivalents per share: $12.79
- Cash and cash equivalents makes up 9.8% of Walt Disney's market capital
- Cash and cash equivalents makes up 11.1% of Walt Disney's total assets
- Receivables of Walt Disney: $12.622 billion
- Receivables makes up 6.1% of Walt Disney's total assets
- Goodwill of Walt Disney: $77.233 billion
- Goodwill per share: $42.70
- Goodwill makes up 32.6% of Walt Disney's total assets
- Cash generated from operation for 9 months: $5.949 billion
- Cash generated from operations per share for 9 months: $3.28
The Walt Disney Company management commentary on their 4th quarter 2020 earnings
BURBANK, Calif. – The Walt Disney Company today reported earnings for its fourth quarter and fiscal year ended October 3, 2020. Diluted earnings per share (EPS) from continuing operations for the fourth quarter was a loss of $0.39 compared to income of $0.43 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter was a loss of $0.20 compared to income of $1.07 in the prior-year quarter. EPS from continuing operations for the year was a loss of $1.57 compared to income of $6.26 in the prior year. Excluding certain items affecting comparability(1), EPS for the year decreased to $2.02 from $5.76 in the prior year. Results in the quarter and fiscal year ended October 3, 2020 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Parks, Experiences and Products segment where since the second quarter of the fiscal year, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended.
“Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year.”
“Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year.”
COVID-19 and measures to prevent its spread impacted our segments in a number of ways, most significantly at Parks, Experiences and Products where our theme parks were closed or operating at significantly reduced capacity for a significant portion of the year, cruise ship sailings and guided tours were suspended since late in the second quarter and retail stores were closed for a significant portion of the year. We also had an adverse impact on our merchandise licensing business. In addition, at Studio Entertainment we have delayed, or in some cases, shortened or cancelled, theatrical releases, and stage play performances have been suspended since late in the second quarter.
We also had adverse impacts on advertising sales at Media Networks and Direct-to-Consumer & International. Since March 2020, we have experienced significant disruptions in the production and availability of content, including the shift of key live sports programming from our third quarter to the fourth quarter and into fiscal 2021 as well as the 2 suspension of production of most film and television content since late in the second quarter, although some film and television production resumed in the fourth quarter. As our businesses reopen 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 the resumption of our operations. 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 adverse impact in the current quarter and year from COVID-19 was approximately $2.4 billion and $6.9 billion, respectively, on operating income at our Parks, Experiences and Products segment due to revenue lost as a result of the closures or reduced operating capacities. The impacts at Media Networks, Studio Entertainment and Direct-to-Consumer & International were less significant. Media Networks had an adverse impact in the current quarter from higher sports programming cost, partially offset by higher advertising revenue, reflecting the shift of sports programming from prior quarters to the current quarter. For the year, Media Networks had a modest benefit reflecting the deferral of sports programming costs into fiscal 2021, when we expect the events to occur, partially offset by lower advertising revenue. At Studio Entertainment, lower revenues due to the deferral or cancellation of significant film releases as a result of theater closures were partially offset by lower amortization, marketing and distribution costs for both the quarter and year.
At Direct-to-Consumer & International for the quarter and year, lower advertising revenue was partially offset by lower costs including the deferral of sports programming costs into fiscal 2021. In total, we estimate the net adverse impact of COVID-19 on our current quarter and full year segment operating income across all of our businesses was approximately $3.1 billion and $7.4 billion, respectively, inclusive of the impact at Parks, Experiences and Products.
The Walt Disney Company (DIS) stock price history over the last 5 years
The image below obtained from Google shows The Walt Disney Company's share price for the last 5 years. And its been a pretty average time for Walt Disney stockholders. 5 years ago Walt Disney was trading at $114 a stock and its currently trading at $135.52. That's a small gain of 21% provided to Walt Disney Stockholders over the last 5 years. The coronavirus pandemic and its impact on the various Disney theme parks across the world has hit the group's earnings hard.
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 : 291.9%
- Walt Disney: 21.6%
The stock of Netflix has easily outperformed that of Walt Disney.
Recent coverage of Walt Disney (DIS)
The extract below covers the latest earnings report from Walt Disney as obtained from Investor.com
Disney (DIS) beat fiscal Q4 forecasts Thursday and forecast lower coronavirus-related costs, as Disney+ continued to draw more subscribers. Disney stock rallied late.
Q4 Disney Earnings Report
Estimates: Analysts expect Disney to swing to a loss of 68 cents a share from year-ago EPS of $1.07 as revenue falls 25% to $14.34 billion, according to Zacks Investment Research.
Results: Loss of 20 cents a share on revenue of $14.71 billion. Disney also booked a $591 million gain on is DraftKings (DKNG) investment. Media networks revenue climbed 11% to $7.2 billion. Parks revenue sank 61% to $2.58 billion. Studio revenue tumbled 52% to $1.6 billion. Direct-to-consumer revenue, which includes streaming, jumped 41% to $4.85 billion.
The number of Disney+ subscribers rose to 73.7 million at the end of the quarter from 60.5 million in early August. ESPN+ subscribers more than doubled to 10.3 million, and Hulu subscribers increased 28% to 36.6 million.
Disney sees coronavirus-related costs could reach $1 billion in fiscal 2021, after hitting $3.1 billion in fiscal Q4 and $7.4 billion for the year. On a call with analysts, management said it expects Disneyland to remain closed until the end of fiscal Q1, meaning the end of December. Meanwhile, Disney World is increasing its capacity to 35% from 25%.
The studio division has suffered from the continued closure of most movie theaters around the country. Disney has delayed the premieres of several top titles, but released "Mulan" on Disney+ in September, testing pay-per-view on that platform for the first time.
Read the full article here
Disney (DIS) beat fiscal Q4 forecasts Thursday and forecast lower coronavirus-related costs, as Disney+ continued to draw more subscribers. Disney stock rallied late.
Q4 Disney Earnings Report
Estimates: Analysts expect Disney to swing to a loss of 68 cents a share from year-ago EPS of $1.07 as revenue falls 25% to $14.34 billion, according to Zacks Investment Research.
Results: Loss of 20 cents a share on revenue of $14.71 billion. Disney also booked a $591 million gain on is DraftKings (DKNG) investment. Media networks revenue climbed 11% to $7.2 billion. Parks revenue sank 61% to $2.58 billion. Studio revenue tumbled 52% to $1.6 billion. Direct-to-consumer revenue, which includes streaming, jumped 41% to $4.85 billion.
The number of Disney+ subscribers rose to 73.7 million at the end of the quarter from 60.5 million in early August. ESPN+ subscribers more than doubled to 10.3 million, and Hulu subscribers increased 28% to 36.6 million.
Disney sees coronavirus-related costs could reach $1 billion in fiscal 2021, after hitting $3.1 billion in fiscal Q4 and $7.4 billion for the year. On a call with analysts, management said it expects Disneyland to remain closed until the end of fiscal Q1, meaning the end of December. Meanwhile, Disney World is increasing its capacity to 35% from 25%.
The studio division has suffered from the continued closure of most movie theaters around the country. Disney has delayed the premieres of several top titles, but released "Mulan" on Disney+ in September, testing pay-per-view on that platform for the first time.
Read the full article here
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 $143.10 per stock (down slightly from our 3rd quarter 2020 earnings report valuation of Walt Disney).
We therefore believe that the stock of Walt Disney's is slightly undervalued. 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 $143.10. A good entry price into Walt Disney would therefore be at $128.80 or below.
We expect the stock of Walt Disney to kick up in coming weeks and months to levels closer to our target price (full value price) in coming weeks and months
We therefore believe that the stock of Walt Disney's is slightly undervalued. 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 $143.10. A good entry price into Walt Disney would therefore be at $128.80 or below.
We expect the stock of Walt Disney to kick up in coming weeks and months to levels closer to our target price (full value price) in coming weeks and months
Next earnings release of Walt Disney
The Walt Disney Company is expected to release their 1st quarter 2021 earnings report in early February 2021