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Disney (DIS) to Report Q3 Earnings: What's in the Cards?

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Disney (DIS - Free Report) is set to report third-quarter fiscal 2020 results on Aug 4.

The Zacks Consensus Estimate for loss has widened from 35 cents to 43 cents per share over the past 30 days. Disney had reported earnings of $1.35 per share in the year-ago quarter.

The consensus mark for revenues is pegged at $12.7 billion, suggesting decline of 37.5% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters but missed the same in the remaining two, the average negative surprise being 7.9%.
 

The Walt Disney Company Price and EPS Surprise

The Walt Disney Company Price and EPS Surprise

The Walt Disney Company price-eps-surprise | The Walt Disney Company Quote

 

Let’s see how things have shaped up for this announcement.

Coronavirus Dents Disney’s Q3 Growth

Disney’s top line for the fiscal third quarter is expected to have been negatively impacted by the outbreak of coronavirus pandemic.

The Zacks Rank #5 (Strong Sell) company is expected to have suffered losses from the closure of its theme parks and cruise ships, and postponement of movie releases. Cancellation of sports events is also expected to have affected its ESPN business.

Disney kept California and Florida parks closed in the to-be-reported quarter, while Shanghai and Hong Kong parks were reopened on May 11 and Jun 18, respectively.

However, reduced capacity due to strict social-distancing norms is expected to have hurt occupancy, thereby negatively impacting top-line growth.

Disney is also expected to have bored the brunt of coronavirus on ad sales similar to social media companies like Twitter (TWTR - Free Report) and Facebook (FB - Free Report) .

While Twitter’s second-quarter 2020 advertising revenues declined 23% year over year to $561.9 million, Facebook expects its second-quarter ad sales to be hurt by weakness in the travel and automotive industries.

The Zacks Consensus Estimate for Parks, Experiences & Consumer Products revenues is currently pegged at $899 million, significantly down from $6.58 billion reported in the year-ago quarter.

Disney+’s Solid Content Portfolio to Aid User Growth

Solid content portfolio of Disney+ is expected to have helped the company gain users during lockdowns amid the pandemic-related physical distancing in the to-be-reported quarter.

Notably, as of May 4, Disney+’s subscriber base had reached 54.5 million, triggered by higher media consumption during lockdowns and on the following of pandemic-related physical distancing norm.

Markedly, Disney+’s closest competitor Netflix (NFLX - Free Report) added 10.09 million paid subscribers globally in its recently reported second-quarter 2020 results.

Disney released much-anticipated Artemis Fowl on the streaming platform during the to-be-reported quarter. Further, Pixar’s Onward was added to the Disney+ library within a few weeks of its release after the movie’s theatrical run was dampened by the closing down of theatres.

Moreover, Disney+ debuted in Japan during the to-be-reported quarter. This expansion is likely to have aided subscriber base.

The Zacks Consensus Estimate for DTC & International/Consumer Products revenues is currently pegged at $4.43 billion, indicating 14.8% growth from the figure reported in the year-ago quarter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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