Disney (DIS) is set to report its fiscal second quarter earnings before the bell on Wednesday, with investors closely monitoring updates on its parks and streaming businesses.
Parks, a historically resilient and significant profit driver, now faces challenges from economic uncertainties and growing competition, particularly with the upcoming launch of NBCUniversal’s Epic Universe.
In the first quarter, the company reported a 5% decline in operating income for its domestic parks segment, largely due to the impact of Hurricanes Milton and Helene and pre-opening expenses related to the launch of the Disney Treasure cruise ship.
The company has maintained its full-year guidance of 6% to 8% operating income growth for parks, with expectations for growth to accelerate in the latter half of the year, supported by strong Disney Treasure bookings. But potential pullbacks in consumer spending and tourism could complicate this outlook.
Disney’s stock has struggled so far this year, down about 17% compared to the benchmark S&P 500’s (^GSPC) 4% drawdown during that same time period.
Here’s how Wall Street expects Disney to perform, according to consensus estimates compiled by Bloomberg:
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Total revenue: $23.05 billion versus $22.08 billion in Q2 2024
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Adj. earnings per share: $1.20 versus $1.21 in Q2 2024
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Entertainment revenue: $10.48 billion versus $9.80 billion in Q2 2024
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Parks and Experiences revenue: $8.76 billion versus $8.39 billion in Q2 2024
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Sports revenue: $4.32 billion versus $4.31 billion in Q2 2024
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Disney+ subscriber net additions: 1.25 million loss versus 4 million additions in Q2 2024
Outside of parks, Disney’s streaming segment could see a revenue boost from recent price increases and password-sharing crackdowns. In February, its direct-to-consumer (DTC) streaming business — which includes Disney+ and Hulu — swung to a profit of $293 million from a loss of $138 million one year ago, ahead of analyst expectations.
It marked the third straight quarter of profitability for the streaming business. Wall Street expects the DTC streaming unit to post a profit of $207 million in the second quarter.
Achieving consistent profits in streaming is critical for Disney and other media giants as more consumers shift to DTC services from traditional pay-TV packages. The company has reiterated its target for streaming profits of approximately $875 million in fiscal 2025.
However, higher prices often lead to subscriber losses. Disney has already warned of a “modest decline” in Disney+ subscribers in Q2 compared to Q1 but expects subscriber growth to pick up again later in the year. Additionally, the company’s subscriber base could take a hit in France due to the end of its distribution agreement with Canal+.
In the sports division, Disney faces near-term challenges. The company expects its sports business to take a $100 million hit due to rising costs for college sports and an additional $50 million write-off from exiting its Venu Sports joint venture.
Meanwhile, the sports division is expected to face challenges. Disney’s sports business will likely incur a $100 million hit from rising college sports costs and an additional $50 million write-off due to its exit from the Venu Sports joint venture.
For fiscal year 2025, Disney has reaffirmed its guidance of high-single-digit earnings per share growth compared to fiscal 2024. Analysts are currently forecasting a 9.5% year-over-year increase.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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