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Category: Stock Market and Walt Disney (DIS)
Date: 9 August 2020 Stock Price of Walt Disney: $130.82 We take a look at entertainment giant Walt Disney's financial results for the 3rd quarter of their 2020 fiscal year. Has the lockdown and social distancing measures to curb the spread of coronavirus assisted Walt Disney in getting more people to use their streaming service? The short answer is no as subscriber growth didn't meet their own estimates. For the 3r quarter the group's revenue declined by -42% and they incurred a loss of -$4.7 billion.
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Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses -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)
Walt Disney Castle in one of their theme parks
Overview of The Walt Disney Company's 3r 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 3rd quarter 2020 earnings
BURBANK, Calif. – The Walt Disney Company today reported earnings for its third fiscal quarter ended June 27, 2020. Diluted earnings per share (EPS) from continuing operations for the quarter was a loss of $2.61 compared to income of $0.79 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter decreased 94% to $0.08 from $1.34 in the prior-year quarter. EPS from continuing operations for the nine months ended June 27, 2020 was a loss of $1.17 compared to income of $5.97 in the prior-year period. Excluding certain items affecting comparability(1), EPS for the nine months decreased 53% to $2.22 from $4.74 in the prior-year period. Results in the quarter and nine months ended June 27, 2020 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Parks, Experiences and Products segment as most of our theme parks and resorts were closed for the entire quarter and our cruise ship sailings were suspended.
The impact of COVID-19 and measures to prevent its spread are affecting our segments in a number of ways, most significantly at Parks, Experiences and Products where we closed our theme parks and retail stores, some of which have now re-opened, suspended cruise ship sailings and guided tours and have seen an adverse impact on our merchandise licensing business. In addition, we have delayed, or in some cases, shortened or cancelled theatrical releases and suspended stage play performances at Studio Entertainment and have experienced an adverse impact on advertising sales at Media Networks and Direct-to-Consumer & International.
We have experienced disruptions in the production and availability of content, including the deferral or cancellation of certain sports events and suspension of production of most film and television content. Many of these businesses have been closed consistent with government mandates or guidance. The most significant impact in the current quarter from COVID-19 was an approximately $3.5 billion adverse impact on operating income at our Parks, Experiences and Products segment due to revenue lost as a result of the closures. The negative impact at Parks, Experiences and Products was partially offset by a positive impact at Media Networks. The benefit at Media Networks was due to the deferral of sports programming rights to future quarters when we currently anticipate the events will air, partially offset by lower advertising revenue.
The impacts at Direct-to-Consumer & International and Studio Entertainment were less significant as lower advertising revenue at Direct-to-Consumer & International was partially offset by the deferral of sports programming costs, while lower amortization, marketing and distribution costs at Studio Entertainment were largely offset by lower revenues as a result of theater closures. In total, we estimate the net adverse impact of COVID-19 on our current quarter 2 segment operating income across all of our businesses was approximately $2.9 billion, inclusive of the impact at Parks, Experiences and Products.
We have experienced disruptions in the production and availability of content, including the deferral or cancellation of certain sports events and suspension of production of most film and television content. Many of these businesses have been closed consistent with government mandates or guidance. The most significant impact in the current quarter from COVID-19 was an approximately $3.5 billion adverse impact on operating income at our Parks, Experiences and Products segment due to revenue lost as a result of the closures. The negative impact at Parks, Experiences and Products was partially offset by a positive impact at Media Networks. The benefit at Media Networks was due to the deferral of sports programming rights to future quarters when we currently anticipate the events will air, partially offset by lower advertising revenue.
The impacts at Direct-to-Consumer & International and Studio Entertainment were less significant as lower advertising revenue at Direct-to-Consumer & International was partially offset by the deferral of sports programming costs, while lower amortization, marketing and distribution costs at Studio Entertainment were largely offset by lower revenues as a result of theater closures. In total, we estimate the net adverse impact of COVID-19 on our current quarter 2 segment operating income across all of our businesses was approximately $2.9 billion, inclusive of the impact at Parks, Experiences and Products.
The Walt Disney Company (NYSE: DIS) stock price history
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 $102 a stock and its currently trading at $130.82. That's a small gain of % 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 and they estimate that at least $2.9 billion has been lost due to Covid-19 pandemic.
The stock of Walt Disney is trading a lot closer to its 52 week high of $153.41 than it is to its 52 week low of $79.07. This to us 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 of $153.41 than it is to its 52 week low of $79.07. This to us is a clear indication that the short term momentum and sentiment towards Walt Disney stock is positive right now
The Walt Disney (NYSE:DIS) share price history over the last 5 years
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 : 382.3%
- Walt Disney: 28.3%
The stock of Netflix has easily outperformed that of Walt Disney.
Walt Disney (DIS) stock vs Netflix (NFLX) stock performance over the last 5 years
Recent coverage of Walt Disney (DIS)
The extract below covers the latest earnings report from Walt Disney as obtained from TheTradeable.com
Disney's Mixed Financial Results
Disney published its financial report yesterday with mixed, yet better than expected, results. It was unexpectedly adjusted earnings per share, even after the coronavirus pandemic hit the company in its most profitable theme parks, media networks, and film studios. Disney expects another multibillion-dollar hit in this quarter due to the pandemic.
The main highlights of the report:Revenue is $11.78 billion against the expected $12.39 billion. Adjusted earnings per share were 8 cents versus an expected loss of 63 cents per share.
Disneyland Suffered from Isolation, Disney+ Demonstrates Slow Subscribers' Growth
As expected, Disneyland parks took the biggest hit due to the pandemic. The division's operating loss is $1.96 billion, compared to a profit of $1.7 billion in the same quarter last year, after Disney struggled with a severe decline in theme park traffic. Most of its global locations were closed for the whole quarter. Disney cruises have also been canceled.
In addition, it was assumed that it was the Disney+, a streaming service, that would be the source of the positive news, but the company didn't meet the expectations for subscriber's growth. The number of subscribers grew by only 57.5 million from a forecast of 59.4 million.
Finally, the company’s media networks operating income rose by 48% and reached the mark of $3.2 billion, which became the largest share of the company’s profit.
Read the full article here
Disney's Mixed Financial Results
Disney published its financial report yesterday with mixed, yet better than expected, results. It was unexpectedly adjusted earnings per share, even after the coronavirus pandemic hit the company in its most profitable theme parks, media networks, and film studios. Disney expects another multibillion-dollar hit in this quarter due to the pandemic.
The main highlights of the report:Revenue is $11.78 billion against the expected $12.39 billion. Adjusted earnings per share were 8 cents versus an expected loss of 63 cents per share.
Disneyland Suffered from Isolation, Disney+ Demonstrates Slow Subscribers' Growth
As expected, Disneyland parks took the biggest hit due to the pandemic. The division's operating loss is $1.96 billion, compared to a profit of $1.7 billion in the same quarter last year, after Disney struggled with a severe decline in theme park traffic. Most of its global locations were closed for the whole quarter. Disney cruises have also been canceled.
In addition, it was assumed that it was the Disney+, a streaming service, that would be the source of the positive news, but the company didn't meet the expectations for subscriber's growth. The number of subscribers grew by only 57.5 million from a forecast of 59.4 million.
Finally, the company’s media networks operating income rose by 48% and reached the mark of $3.2 billion, which became the largest share of the company’s profit.
Read the full article here
Walt Disney's streaming service 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 $150.80 per stock (up slightly from our 2nd quarter 2020 earnings report valuation of Walt Disney).
We therefore believe that the stock of Walt Disney's is close to being 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 $150.80. A good entry price into Walt Disney would therefore be at $135.70 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 close to being 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 $150.80. A good entry price into Walt Disney would therefore be at $135.70 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 4th quarter and full fiscal 2020 earnings report in early November 2020