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CEO Bob Iger: Looking at the renewed strength of our businesses this quarter –
from Sports, to Entertainment, to Experiences –
the stage is now set for significant growth and success.

Disney Q1 2024: Stage is Set
for Significant Growth and Success

Shares of Disney surged more than 11% after the company reported fiscal Q1 results ahead of expectations and made several newsworthy announcements, notes Douglas Gerlach, editor-in-chief of Investor Advisory Service newsletter.

“Revenue of $23.5 billion was flat versus the prior year, but cost cutting efforts helped the bottom line. Adjusted EPS of $1.22 advanced 23% over the prior year. Disney reduced expenses by $500 million in the quarter and said it was on track to meet or exceed its $7.5 billion annualized savings target by the end of the fiscal year. For Fiscal 2024, the company expects to increase adjusted EPS over 20% to $4.60.

Looking at Q1 performance for the company’s three segments, Experiences, which includes the theme parks, led the way, contributing 80% of operating income. Revenue in Experiences advanced 7%, with an 8% increase in operating income.

Within its Entertainment segment, revenue declined 7% while operating income more than doubled thanks to a dramatic improvement in losses related to its direct-to consumer offerings. The DTC operating loss declined nearly $850 million versus the prior year, and Disney continues to expect to reach profitability in the fiscal fourth quarter. Management also indicated for the first time it expects the DTC business to ultimately have double-digit operating margins, though it did not outline a timeline for achieving this goal. A password-sharing crackdown later this year will contribute to subscriber growth and profitability.

The final segment, Sports, reported 4% revenue growth with a modest improvement in losses. Announcements the company made include the planned offering of ESPN in the fall of 2025 as a standalone streaming option that will include additional features like integrated wagering and enhanced statistics.

In the days leading up to the earnings release, the company also announced it will be part of a bundled sports streaming service with Warner Bros. Discovery and Fox that is expected to launch this fall.

Disney also announced a $1.5 billion investment in Epic Games, maker of the popular game Fortnite. Additionally, Disney raised its dividend by 50% and said it is targeting $3 billion of share repurchases in Fiscal 2024. DIS is a buy up to 101.”

Editor’s Note: Now celebrating its 51st year of publication, the Investor Advisory Service newsletter has been named to the Hulbert Investment Honor Roll for the 14th consecutive year, acknowledging its long-term outperformance in both bull and bear markets over the long-term. Douglas Gerlach, editor-in-chief of the Investor Advisory Service newsletter has a Special Subscription Offer of 35% off of the regular subscription price. Click Here for Details.

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