Can DIS Stock Maintain Momentum With Streaming Wins and Parks Growth?

Core Insights - Disney is at a pivotal moment as its streaming segment shows improved profitability while theme park operations remain robust despite industry challenges [2] Streaming Segment Performance - The direct-to-consumer operating income for streaming reached $352 million in Q4 fiscal 2025, marking a 39% increase year over year [2] - Full-year streaming operating income totaled $1.3 billion, a significant recovery from a $4 billion loss three years prior [3] - Combined subscriptions for Disney+ and Hulu reached 196 million, with an addition of 12.4 million subscribers from the previous quarter [3] - Disney+ Core achieved 132 million subscribers, and plans to fully integrate Hulu into Disney+ by 2026 were announced [3] - Management anticipates 10% operating margins for Disney+ and Hulu in fiscal 2026 [3] Theme Parks Performance - The Experiences segment reported a record operating income of $1.9 billion in Q4, up 13%, and a full-year operating income of $10 billion, up 8% [4] - Domestic parks saw a 9% increase in operating income to $920 million, while international parks surged 25% to $375 million, driven by strong performance at Disneyland Paris [4] - Despite a slight 1% decline in domestic attendance, guest spending increased by 5% in Q1 fiscal 2026 [5] - The company projects high single-digit percentage growth for Experiences' operating income in fiscal 2026, with growth expected to be weighted towards the second half [5] Strategic Outlook - Disney's shift towards streaming validates its direct-to-consumer strategy, while the parks continue to thrive through premium pricing [6] - Management forecasts double-digit adjusted earnings growth through fiscal 2027, supported by rising streaming margins [6] Industry Comparisons - Comcast's Universal theme parks experienced a 19% revenue growth to $2.72 billion, driven by the opening of Epic Universe [7] - Six Flags reported a 1% increase in attendance but a 2% decline in revenues, attributing the decline to promotional activities and changes in attendance demographics [8] Valuation and Estimates - Disney shares have returned 1.1% over the past three months, outperforming the Zacks Consumer Discretionary sector's 4.8% decline [9] - The stock is trading at a forward 12-month price/earnings ratio of 16.81X, compared to the industry average of 18.74X [13] - The Zacks Consensus Estimate for Disney's earnings is $6.60 for fiscal 2026, indicating an 11.3% year-over-year growth [15]