Disney Stock Before Q3 Earnings: Buy Now or Wait for Results?

Core Viewpoint - The Walt Disney Company is expected to report its third-quarter fiscal 2025 results on August 6, with revenue estimates at $23.67 billion, reflecting a modest growth of 2.23% year-over-year, and earnings per share expected to be $1.47, indicating a growth of 5.76% year-over-year [1][12]. Revenue and Earnings Estimates - The consensus estimate for revenues is $23.67 billion, suggesting a 2.23% increase from the previous year [1]. - The earnings per share consensus has decreased by a penny to $1.47, indicating a year-over-year growth of 5.76% [1]. - The estimated revenues for the Entertainment segment are projected at $10.84 billion, representing a 2.5% increase year-over-year [7]. - The Experiences segment is estimated to generate $8.4 billion in revenues, showing marginal growth of 0.3% year-over-year [11]. Recent Performance and Trends - In the last reported quarter, Disney achieved an earnings surprise of 22.88%, with an average surprise of 16.38% over the last four quarters [2]. - The Entertainment segment reported an operating income of $1.3 billion, a significant increase of 61% year-over-year [5]. - The direct-to-consumer segment's operating income surged to $336 million from $47 million a year earlier, with expectations for continued profitability growth [6][8]. - Disney+ gained 1.4 million subscribers, while Hulu added 1.3 million subscribers in the fiscal second quarter, contributing to positive momentum [8]. Strategic Developments - The Sports segment benefited from a 29% year-over-year growth in ESPN's domestic advertising revenues, with new initiatives expected to enhance performance [9]. - Disney announced its seventh theme park resort in Abu Dhabi, which is anticipated to significantly impact the Experiences segment and access a large global audience [10]. - The company is trading at a forward P/E of approximately 18.61x, which is below the industry average of 20.25x, indicating a potentially attractive valuation [15]. Investment Considerations - Disney presents a compelling buy opportunity ahead of the third-quarter earnings, supported by strong fundamentals and multiple growth catalysts [18]. - The integrated ecosystem of Disney+, Hulu, and ESPN creates sustainable competitive advantages, especially as rivals face streaming losses [18]. - The convergence of streaming profitability, international expansion, and robust operational momentum positions Disney favorably for future growth [19].