Why Is Disney (DIS) Down 5.9% Since Last Earnings Report?

Core Insights - The Walt Disney Company reported strong Q1 fiscal 2025 earnings, with adjusted earnings of $1.76 per share, surpassing estimates by 22.2% and increasing 44.3% year over year [2] - Revenues for the quarter rose 4.8% year over year to $24.69 billion, slightly beating the consensus mark by 0.1% [2] Segment Performance - Media and Entertainment Distribution, accounting for 44% of total revenues, saw an 8.9% year-over-year increase to $10.87 billion [3] - Linear Networks revenues declined 6.6% year over year to $2.61 billion, while Direct-to-Consumer revenues increased 9.5% to $6.07 billion [3] - Content Sales/Licensing and Other revenues grew significantly by 33.8% year over year to $2.18 billion [3] - Parks, Experiences and Products revenues rose 3.1% year over year to $9.41 billion, with domestic revenues at $6.43 billion (up 2.1%) and international revenues at $1.64 billion (up 11.5%) [4] - Consumer Products revenues decreased 1.6% year over year to $1.33 billion [4] Subscriber Metrics - Disney+ had 124.6 million paid subscribers as of December 28, 2024, up from 122.7 million in the previous quarter [5] - Domestic average monthly revenue per paid subscriber increased from $7.7 to $7.99, while international revenue per subscriber rose from $6.78 to $7.19 [5][6] Operating Income - Total costs and expenses remained flat at $20.61 billion, with segmental operating income increasing 30.5% year over year to $5.06 billion [7] - Media and Entertainment Distribution's operating income surged 94.9% to $1.7 billion, while Linear Networks' operating income declined 11.2% to $1.09 billion [7][8] - Direct-to-Consumer operating income improved to $293 million from a loss of $138 million in the prior year [9] - Parks, Experiences and Products' operating income was $3.11 billion, up 0.2% year over year [10] Financial Position - As of December 28, 2024, cash and cash equivalents were $5.48 billion, down from $6 billion [13] - Total borrowings decreased slightly to $45.3 billion from $45.81 billion [13] - Free cash flow for the quarter was reported at $739 million [13] Future Guidance - For fiscal 2025, Disney anticipates high-single digit adjusted EPS growth and over $15 billion in cash from operations [14] - The company expects a modest decline in Disney+ Core subscribers in Q2 fiscal 2025 and anticipates segment operating income growth in Entertainment [14][15] Market Sentiment - Estimates for Disney have trended downward, with a consensus estimate shift of -7.66% over the past month [16] - The stock has a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [18]