How did Wall Street analysts get Disney (DIS) earnings today so wrong? Analysts had been projecting earnings of 86 cents a share. The company reported earnings of just 60 cents for the company’s second quarter.
The bigger-than-Disney takeaway here is “Wonder if it would be prudent to suspect analysts are still way high on earnings for a lot of companies? I mean Disney isn’t exactly an obscure underfollowed stock.”
Revenue climbed 21% to $18 billion but that was a result of the company’s acquisition of the entertainment assets of 21st Century Fox last year.
Just about every part of Disney took a hit from the coronavirus recession. The theme park division, for example, went from a profit of $1.5 billion in the second quarter of 2019 to a just $639 million this year. That’s a drop of 58% year over year.
The company’s film studio, which was on a high last year, saw operation income drop to $466 million, a decrease of 8% year over year. Disney ended 2019 with all five of the top-grossing movies in the world. Revenue from the film studio in the December 2019 quarter was up 376% year over year.
And it’s very likely that the worst is yet to come. The quarter included only a few weeks of “shelter-at-home” orders in the United States. Disney closed its Asian theme parks in January and February but didn’t close its U.S. parks until mid-March. (The company said it would reopen its Shanghai theme park on May 11.) Buttressing that negative view of the July quarter Disney said it would forego its July dividend payment and cut capital spending by $900 million.I own Disney in my long-term 50 Stocks Portfolio. The position is down 23.61% since I added it on May 16, 2019. I own September 18, 2020 Put Options with a strike price of $100 on Disney in my Volatility Portfolio on my subscription sites JubakAM.Com and JugglingWithKnives.com as a short-term bet on the decline in the stock price.
Disney closed at $101.06 today, down 2.05 in the regular trading session. In after-hours trading Disney fell another 2.24% to $98.80. Year to date for 2020 the shares are down 30.13%.