Disney 4Q profit tops estimates on better subscribers
Disney posted fourth-quarter profit that beat analysts’ expectations and said it will cut an additional USD 2 billion in expenses. The results featured better-than-expected adjusted earnings and a strong read on subscribers for its streaming-video service. Disney delivered a strong finish to fiscal 2023 despite industry headwinds, with lower streaming losses of USD 2.6 billion amid a commitment to reaching profit in 4Q24. Disney outperformed expectations on earnings per share, operating income, cash flow, and Disney+ subscribers as management moves aggressively to slash costs and restructure the company.
Disney’s numbers were solid overall, although revenues came in lighter than expected, largely due to the continued deterioration of the linear TV business. The company posted revenue of USD 21.24 billion in the fourth quarter, up + 5.4% YoY, missing Street view by 0.9%. Adjusted earning of USD 0.82 per share raises 173% YoY, beating analyst expectations by 19.2%. Disney+ subscribers of 150.2 million beat estimate of 147.07 million. The experiences segment's revenue increased 13% to USD 8.16 billion, as domestic and international parks and experiences operations grew 7% and 55%, respectively.
Total segment operating income improved 86% YoY to USD 2.98 billion, beating consensus by 11.2%.
Valuation:
Disney currently trades at 18.1x P/E 24E, below its 5-year historical average of 25.8x and below the MSCI USA Media Index (18.8x). On a 2024E EV/EBITDA basis, the stock is trading at 11.4x, below its 5-year average of 12.2x and above the MSCI USA Media Index (10x). On a P/S 24E basis, the stock is trading at 1.7x, below its 5-year average of 2.7x and below the MSCI USA Media Index (3.6x).
We confirm our strong buy recommendation.
Management Outlook
Management expects to grow free cash flow in fiscal 2024 significantly versus fiscal 2023, approaching levels last seen pre-pandemic. Disney continues to expect that its combined streaming businesses will reach profitability in Q4 of FY24, although progress may not look linear from quarter to quarter. Disney continues to aggressively manage the cost base, and has increased its annualized efficiency target to USD 7.5 billion, versus USD 5.5 billion previously.
Financials
Fiscal year 2025* | Fiscal year 2026* | Fiscal year 2027* | |
---|---|---|---|
Revenue in mn | 102,642 | - | - |
Revenue growth (%) | 4.4 | - | - |
Net income in mn | 11,307 | - | - |
Adjusted EPS | 6.20 | - | - |
Profit margin (%) | 11.0 | - | - |
Return on equity (%) | 9.6 | - | - |
P/E ratio (x) | 13.6 | - | - |
P/S ratio (x) | 1.5 | - | - |
P/B ratio (x) | 1.3 | - | - |
Dividend Yield (%) | 1.4 | - | - |
Stock and Price Data
Country | Market Cap in bn | ISIN | Sector | Price | Small Cap |
---|---|---|---|---|---|
United States of America | |||||
United States of America | USD 154.6 | US2546871060 | Comm. Services | USD 84.50 | No |
Performance
Performance in %
Since inception* | YTD | Last 6 months |
---|---|---|
-18.3 | -2.7 | -17.3 |
VP Bank Sustainability Score
VP Bank AG
CIO Office — Group Equity & Bond Selection
Aeulestrasse 6, 9490 Vaduz, Liechtenstein
T +423 235 63 99; cio-office@vpbank.com
Prices per previous day close. Sources for charts and stats:, Bloomberg, VP Bank
Selected Information ©2023 MSCI ESG Research LLC. Reproduced by permission.
This document was produced by VP Bank AG (hereinafter: the Bank) and distributed by the companies of VP Bank Group. This documentation is for information purposes only and does not constitute an offer or an invitation to buy or sell financial instruments. The recommendations, assessments and statements it contains represent the personal opinions of the VP Bank AG analyst concerned as at the publication date stated in the document and may be changed at any time without advance notice. This document is based on information derived from sources that are believed to be reliable. Although the utmost care has been taken in producing this document and the assessments it contains, no warranty or guarantee can be given that its contents are entirely accurate and complete. In particular, the information in this document may not include all relevant information regarding the financial instruments referred to herein or their issuers. Past performance is not indicative of future results.
Additional important information on the risks associated with the financial instruments described in this document, on the characteristics of VP Bank Group, on the treatment of conflicts of interest in connection with these financial instruments and on the distribution of this document by the companies of the VP Bank Group can be found at https://www.vpbank.com/en/legal_notice
Liechtenstein: VP Bank AG, 9490 Vaduz · info@vpbank.com
Schweiz: VP Bank (Schweiz) AG, 8001 Zurich · info.ch@vpbank.com
Luxembourg: VP Bank (Luxembourg) SA, 2540 Luxembourg · info.lu@vpbank.com
Singapore: VP Bank Ltd Singapore Branch, 018960 Singapore · info.sg@vpbank.com
British Virgin Islands: VP Bank (BVI) Ltd, Tortola VG1110 · info.bvi@vpbank.com