Disney Completes Its Huge Turnaround in 2024
Two years ago this week, The Walt Disney Company reported its annual earnings and provided insight into upcoming expectations.
The conversation went so well that then-CEO Bob Chapek lost his job within two weeks.
The Walt Disney Company
Wall Street cares about annual projections more than anything else, and Disney’s forecast at the time downgraded those estimates.
So, a panicked Disney Board of Directors promptly fired Chapek and restored Bob Iger as CEO.
Image rights: CNBC and Illustration by Elham Ataeiazar
Iger has spent the past two years rebuilding Disney after the fractured Chapek era.
We know that Iger only has two more years remaining in his second tenure, as Disney is currently vetting candidates to replace him.
Mandatory Credit: Photo by JUSTIN LANE/EPA-EFE/Shutterstock
Thus, Disney’s current earnings double as Iger’s legacy as he prepares his second departure from the company.
How did Disney perform during its second full year of Iger II?
Photo: Disney
Well, Disney has completed its huge turnaround in 2024 with another solid earnings report.
Mr. Iger’s Wild Ride
Photo: Deadline
In case you’ve forgotten, Disney is finishing an eventful and sometimes tumultuous 2024 campaign.
The year started with Iger battling activist investor Nelson Peltz for a pair of seats on Disney’s Board.
Bob Iger
In the build-up to that corporate showdown, Disney stock briefly fell under $80.
Then, a sustained surge led to a peak of $121.53 on April 1st.
Photo: Willow Bay on Instagram (via PEOPLE)
Fittingly, that was the cutoff date for shareholders to vote and thereby pick sides in the Peltz/Iger feud.
Soon afterward, Disney stock dropped again, as many short-term investors engaged in profit-taking. They made a quick buck and got out.
Bob Iger – 2024 Annual Shareholder Meeting
Gradually, Disney stock eroded once more as concerns about the economy grew.
Just three months ago, you could buy Disney for $85.60, making much of the past year’s upheaval rather pointless.
Bob Iger – 2023 Annual Shareholder Meeting
However, the past few months have proven kind to Disney as analysts have more carefully evaluated the company.
At the close of business on November 13th, Disney stock was trading at $102.72, a credit to Iger’s performance.
Heidi Gutman/Walt Disney Television
In short, after 21 shaky months during Iger’s return, all signs point to him righting the ship lately.
This morning’s earnings report would serve as either confirmation of that assertion of a refutation of Iger’s work to date.
Scott Mlyn | CNBC
So, how did the story play out? Let’s talk about the business of Disney.
Disney by the Numbers
AP Photo/Richard Drew, File
Wall Street expected Disney to excel during its most recent fiscal earnings report, the capper on fiscal 2024.
As mentioned on MickeyBlog, the new fiscal year started at Disney in early October, which is why several projects have recently started.
Photo: History.com
However, only Disney knew its actual results coming into today. Everyone else was merely speculating.
Still, the speculation proved highly favorable to Disney and Iger, with Wall Street forecasting earnings per share of $1.10.
Photo:NYpost.com
Similarly, analysts projected Disney quarterly revenue of $22.45 billion. Both these numbers reflect solid gains year-over-year.
So, for the first time in ages, Wall Street appears bullish on Disney’s standing.
Photo Credit: AP Photo/Richard Drew, File
There is cause for concern, though, at least in the theme park division.
Given the timeline of this quarter’s report, it will not most of the hurricane-related expenses, but there are other underlying concerns.
As a reminder, Disney had previously suggested flat growth in the Experiences segment.
Meanwhile, Wall Street was braced for a drop of 10-15 percent, especially in the wake of Comcast’s disappointing Universal Studios revenue reports.
(AP Photo/Matt Dunham, file)
In actuality, Disney reported earnings per share (EPS) of $1.14 and quarterly revenue of $22.57 billion.
For the year, Disney earned $91.361 billion, an increase of 2.8 percent from fiscal 2023’s $88.898 billion.
Image: The Wall Street Journal
During the fourth quarter, Disney’s revenue dropped 2.6 percent from the summer quarter’s $23.155 billion.
That’s a very solid hold during what’s historically Disney’s slow season, the fiscal fourth quarter which covers July, August, and September.
Let’s Talk about Disney’s Cores
Photo: Disney
Recently, Disney streamlined its operations into three main cores. They are Entertainment, Sports, and Experiences.
You can think of Sports as the ESPN core, while Entertainment covers Disney’s film and television segments.
Photo: Disney/ESPN
Experiences covers everything in the hospitality industry, including Adventures by Disney, Disney Cruise Line, and the various theme parks.
Disney also tracks Linear Networks as its own thing to show investors the degradation of its revenue.
Photo: Disney+
Finally, we have Direct-to-Consumer (DtC), the streaming operation that was in extreme financial peril two years ago.
After Chapek reported a quarterly loss of $1.4 billion, that’s when Wall Street revolted, causing Disney to make a change.
Photo: Marvel
During the most recent quarter, Disney Entertainment earned $10.83 billion, an increase of 2.4 percent from the prior quarter’s $10.58 billion.
The Sports core brand managed $3.914 billion, which is almost identical to last year’s $3.910 billion during the same quarter.
Photo: ESPN
We all care the most about Disney Experiences, which managed $8.24 billion this quarter after $8.386 billion last quarter.
Notably, operating income in the Experiences division was down 5.7 percent, as Disney had previously indicated as a possibility.
Image: Freeform
The drop is less than half what Wall Street feared, though.
With Linear Networks, Disney declined a modest 7.8 percent from $2.668 billion to $2.461 billion.
Why Wall Street Loves Disney Now
Photo: CNBC
Then, we have the class valedictorian this year, DtC, which has shown staggering improvement under Iger.
During the most recent quarter, Disney’s streaming revenue reached $5.783 billion, up 14.8 percent from last year’s $5.036 billion.
Photo: Apple
As a point of reference, this division earned $19.886 billion in fiscal 2023. For fiscal 2024, revenue soared to $22.776 billion.
Also, DtC lost $2.496 billion in fiscal 2023. Somehow, Disney and Iger improved that total to a profit of $143 million in 2024.
Photo: Getty
That improvement alone exemplifies why Wall Street is so optimistic about Disney’s financial future.
Overall, Disney had a strong year and projects to have an even better one in fiscal 2025.
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