Core Viewpoint - Walt Disney's stock performance has shown a slight decline recently, but it has outperformed the Consumer Discretionary sector and the S&P 500 over the past month, indicating a mixed but generally positive outlook for the company ahead of its upcoming earnings report [1][2]. Financial Performance - The upcoming earnings report for Walt Disney is scheduled for February 5, 2025, with projected EPS of $1.45, reflecting an 18.85% increase year-over-year. Quarterly revenue is expected to be $24.7 billion, up 4.87% from the previous year [2]. - Full-year Zacks Consensus Estimates predict earnings of $5.41 per share and revenue of $94.94 billion, representing year-over-year increases of 8.85% and 3.91%, respectively [3]. Analyst Sentiment - Recent revisions to analyst forecasts for Walt Disney are crucial as they indicate short-term business trends. Positive estimate revisions are seen as a sign of optimism regarding the company's outlook [4]. - The Zacks Rank system, which assesses estimate changes, currently ranks Walt Disney at 3 (Hold), with no changes in the EPS estimate over the past month [6]. Valuation Metrics - Walt Disney is trading at a Forward P/E ratio of 20.94, which is below the industry average of 22.08, suggesting that the stock is undervalued compared to its peers [7]. - The company has a PEG ratio of 2.03, which is lower than the industry average of 2.49, indicating a more favorable valuation in terms of projected earnings growth [8]. Industry Context - The Media Conglomerates industry, to which Walt Disney belongs, ranks in the bottom 28% of all industries, according to the Zacks Industry Rank, which assesses the performance of industry groups [8][9].

Company Valuation and Performance - The Walt Disney Co (DIS) was previously considered to be up to 55% undervalued in October [1] - Since October, the company's shares have increased by approximately 20% [1] - There is still potential upside for the company's valuation [1] Analyst Background and Methodology - The analysis is conducted by an individual with over 15 years of market experience in stocks, FX, crypto, and commodities [1] - The analyst holds a master's degree in finance and combines microeconomic studies of company financials with a macroeconomic perspective [1] Analyst Position and Disclosure - The analyst holds a beneficial long position in DIS through stock ownership, options, or other derivatives [2] - The analysis represents the analyst's own opinions and is not influenced by compensation or business relationships with mentioned companies [2]

Group 1 - Disney's stock investors are seeking clarity on the rationale behind its streaming TV deal with Fubo [1] - The stock prices referenced were from the afternoon of January 23, 2025, indicating a specific timeframe for the analysis [1] - The video discussing this deal was published on January 25, 2025, suggesting a timely examination of the market reaction [1]

Core Viewpoint - Walt Disney is poised to outperform the market in 2025 after a strong performance in 2024, where shares rose 24%, aligning with the S&P 500 [1][4]. Group 1: Recent Performance and Growth - Disney's recent successes include the release of the three highest-grossing movies of 2024 and a profitable Disney+ streaming segment, which had previously incurred billions in losses [3]. - The company's market cap has surpassed $200 billion, reflecting a turnaround since Bob Iger's return as CEO, although revenue growth has been modest, remaining in the single digits for four of the last five fiscal years [4]. - In fiscal 2024, Disney exceeded Wall Street profit targets for all four quarters, with net income growing significantly faster than revenue, which increased by only 3% [5]. Group 2: Future Outlook and Strategies - Analysts project a modest 4% revenue growth for fiscal 2025, while Disney's guidance anticipates adjusted net income to rise in the high single digits [6]. - The company is focusing on long-term growth through expansion projects at domestic theme parks and scalability for Disney+ [7]. - Disney plans to add another cruise ship to its fleet and has made significant announcements regarding its premium cruise line, which is crucial for future growth [8]. Group 3: Upcoming Releases and Market Position - In 2025, Disney will release new installments in popular franchises, including Captain America and Avatar: Fire and Ash, which is expected to be a major box office success [9]. - Disney's stock is currently trading at a reasonable 20 times this year's adjusted earnings estimate, with expectations of a return to double-digit bottom-line growth in fiscal 2026 and 2027 [10]. - As valuations for many tech leaders are extended, Disney is emerging as a compelling flight-to-safety investment for 2025 [11].

Executive Compensation - Disney CEO Bob Iger's total pay package increased to $41 1 million in fiscal 2024, up 30% from $31 6 million in the previous year [1] - Hugh Johnston, Disney's CFO since December 2023, made $24 5 million last year [2] - Horacio Guttierez, Disney's Senior EVP and Chief Legal and Compliance Officer, earned $15 8 million, up from $11 6 million in fiscal 2023 [2] Succession Planning - Disney is preparing for CEO succession ahead of Bob Iger's contract expiration on December 31, 2026 [1] - The successor will be selected by early 2026 from a pool of four internal candidates and outsiders [1] Shareholder Meeting - Disney's annual shareholder meeting will be held virtually on March 20 [3] - Last year's meeting saw challenges from activist shareholders, including Nelson Peltz, who raised concerns about film studio dysfunction and excess costs [3] - This year's meeting is expected to be less contentious, with the company urging "no" votes on three shareholder proposals related to climate-related investments, participation in the Human Rights Campaign's Corporate Equality Index, and ad spending on platforms with disfavored political and religious viewpoints [4]

Group 1 - Disney stock experienced a significant recovery in the latter half of 2024, rising from a low of $85.60 to $111.35, resulting in a 24.5% gain, which underperformed the S&P 500's 25% return [1] - The primary catalyst for this rebound was Disney's Q4 and full-year 2024 earnings report, which exceeded market expectations for both earnings and revenue [2] - As of January 23, 2025, Disney stock price decreased to $108.86, reflecting a 2.26% decline since the start of the year [2] Group 2 - Wall Street analysts are becoming increasingly optimistic about Disney, with Citigroup's Jason Bazinet setting a price target of $125, indicating a 15% upside [3][4] - Citi anticipates an 8% growth in EPS for 2025, followed by 11% and 13% growth in 2026 and 2027, respectively, based on strategic mergers and product launches [5] - Citi's EPS estimates for 2025 and 2026 are below market expectations, with a bear case scenario suggesting a downside to $96, while a bull case could see the stock rise to $134 [6][7] Group 3 - Bazinet resumed coverage on Disney with a conservative price target of $125 and a 'Buy' rating, advising investors to monitor the upcoming earnings call on February 5 [8]

Stock Performance - Disney stock gained 24.5% in 2023, slightly underperforming the S&P 500's 25% gain [1] Streaming Business - Disney's streaming platforms (Disney+, Hulu, ESPN+) are now profitable, with entertainment streaming reporting $253 million operating income in Q4 2024, up from a $420 million loss last year [3][4] - Total streaming operating income reached $321 million in Q4 2024 [4] - Disney ended Q4 2024 with 174 million total streaming subscriptions, including 120 million core Disney+ subscriptions, a 4.4 million increase from last year [5] - Management expects an $875 million increase in entertainment streaming operating income in 2025 [5] Content Pipeline - Disney had the top 3 grossing films worldwide in 2024: Inside Out 2, Deadpool & Wolverine, and Moana 2 [7] - The company has 10 films slated for release in 2025, mostly sequels or based on previous content, including Avatar: Fire and Ash and live-action Snow White [8] - Disney's content strategy focuses on creating franchises that can be monetized across multiple platforms, including theaters, streaming, parks, and merchandise [9] Parks and Experiences - Parks and experiences segment saw a 1% sales increase but a 6% operating income decrease in Q4 2024 [12] - Management expects improvement as the American consumer strengthens and new attractions are introduced [12] - Disney's parks are considered unparalleled assets that differentiate the company in the entertainment industry [10][11] Financial Outlook - Earnings per share (EPS) increased from $1.29 to $2.72 for the year, with management guiding for a low increase in adjusted EPS for 2025 [5] - The company recently reinstated its dividend [13]

Stock Performance - Walt Disney (DIS) closed at $108 81, marking a +0 1% move from the prior day, lagging the S&P 500's daily gain of 0 61% [1] - Over the past month, shares of the company lost 3 43%, underperforming the Consumer Discretionary sector's loss of 1 39% and the S&P 500's gain of 2 08% [1] Earnings and Revenue Projections - The company is predicted to post an EPS of $1 45 for the upcoming quarter, indicating an 18 85% growth compared to the same quarter last year [2] - Revenue for the upcoming quarter is projected at $24 7 billion, reflecting a 4 87% rise year-over-year [2] - Full-year Zacks Consensus Estimates predict earnings of $5 41 per share and revenue of $94 94 billion, representing year-over-year changes of +8 85% and +3 91%, respectively [3] Analyst Estimates and Zacks Rank - Recent revisions to analyst estimates reflect the latest near-term business trends, with upbeat changes indicating a favorable outlook on the company's business health and profitability [3] - Walt Disney currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining steady over the past month [5] Valuation Metrics - Walt Disney has a Forward P/E ratio of 20 08, indicating a discount compared to its industry's Forward P/E of 21 51 [6] - The company's PEG ratio is 1 94, lower than the Media Conglomerates industry average of 2 43 [6] Industry Overview - The Media Conglomerates industry, part of the Consumer Discretionary sector, has a Zacks Industry Rank of 169, placing it in the bottom 33% of all industries [7] - The top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Disney's stock has experienced a mixed performance in 2025, declining by approximately 3% year-to-date but up about 20% since the beginning of 2024, with expectations that its streaming business will drive stock performance this year [1] Streaming Business Performance - The direct-to-consumer segment generated $5.8 billion in revenue over the last quarter, marking a 15% year-over-year increase, while operating profits rose to $321 million, a significant turnaround from a $387 million loss in the same period last year [2] - Disney+ added 4.4 million core subscribers last quarter, reaching approximately 123 million subscribers, a 9% increase year-over-year, while Hulu had about 52 million subscribers, up about 7% [2] - The strategy of raising prices has contributed to revenue growth, with the ad-free Disney+ plan increasing by $2 to $16 in October, indicating strong pricing power and an engaged user base [2] Competitive Strategy - Disney is adopting strategies similar to Netflix, including the introduction of an ad-supported streaming plan and a crackdown on password sharing, which has led to significant growth for Netflix [3] - Approximately 50% of U.S. Disney+ subscribers now choose the ad-supported version, with 37% of active subscribers on these plans, reflecting a successful push towards ad-supported tiers [3] - Disney's paid-sharing feature, introduced in September 2024, allows users to add members outside their household for an additional fee, potentially mirroring Netflix's successful implementation of this feature [3] Subscriber Comparison - As of Q3 2024, Netflix reported 283 million global subscribers, a 14% year-over-year increase, while Disney has about 175 million subscribers across Hulu and Disney+, growing at a slower 8% [4] - Netflix plans to stop reporting subscriber figures from 2025 onward, suggesting a potential slowdown in growth, while Disney may continue to benefit from its paid-sharing and diverse offerings [4] Profitability and Cost Management - Disney's marketing costs for its streaming business are decreasing as the platform matures, and bundling Disney+, Hulu, and ESPN+ for as low as $17 per month could enhance customer retention and reduce churn [5] - The bundling strategy may also create cross-selling opportunities that Netflix cannot replicate [5] Content Monetization - Disney's investments in streaming are expected to yield longer-term value, as it can monetize content across various platforms, including theatrical releases, theme parks, and merchandise [6] - Disney's extensive intellectual property library, including franchises like Marvel and Star Wars, supports its content strategy, with successful film releases contributing to a steady pipeline of high-quality content for streaming [7] Stock Performance and Valuation - Disney's stock has shown volatility over the past four years, with annual returns of -15% in 2021, -44% in 2022, 4% in 2023, and 24% in 2024, raising questions about future performance in uncertain macroeconomic conditions [8] - The current valuation of Disney stock is estimated at $130 per share, approximately 21% above the current market price, indicating potential for recovery [8]

The Walt Disney Company's box office domination continued over the holiday weekend."Moana 2" topped $1 billion during the Martin Luther King Jr. Day weekend, becoming the studio's third 2024 release to reach the coveted benchmark after Marvel Studios' "Deadpool and Wolverine" and Pixar's "Inside Out 2." No other Hollywood studio had a film cross $1 billion last year."Moana 2" snared $442.8 million at the domestic box office and $567.1 million in international markets, the company posted over the weekend. It ...