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Disney Q1 preview: A litmus test for Bob Iger amid streaming struggles

Seeking Alpha logo Seeking Alpha 2/7/2023

Disney (NYSE:DIS) is scheduled to announce Q1 earnings results on Wednesday, February 8th, after market close.

The consensus EPS Estimate is $0.79 (-25.5% Y/Y) and the consensus Revenue Estimate is $23.29B (+6.7% Y/Y).

Over the last 3 months, EPS estimates have seen 0 upward revisions and 10 downward. Revenue estimates have seen 2 upward revisions and 9 downward.

The house of mouse ended 2022 with the surprise return of former CEO Bob Iger to replace the short-lived Bob Chapek. To start 2023, Iger has made changes to park policy and outlined plans for in-office work for employees.

However, Nelson Peltz has placed Iger and his board in his crosshairs for an activist campaign. Disney has vehemently opposed Peltz’s efforts, as outlined in company statements.

Elsewhere, the company has seen the latest installment of its Avatar franchise become one of the highest grossing films of all time. The Avatar franchise is expected to be a key positive for Disney's Q1, along with theme park attendances.

The Q1 results will also be a test for Iger, who has come back with a mandate to "set the strategic direction for renewed growth" with Disney continuing to struggle with financials on its media side, in large part to ad slowdowns and linear subscriber declines.

Disney's streaming losses peaked in its last quarter, missing revenue and profit expectations despite a stellar result from its theme parks division.

The company's Q1 results will be dominated by commentary on strategic and operational visions, according to RBC Capital Markets. A concrete plan may not yet be in place yet, but Disney could be considering licensing some of its content library to outside media companies according to a Bloomberg report.

Loop Capital, meanwhile, said Disney may lower its guidance for streaming subscribers with a corresponding reduction in marketing, and possibly programming expenses as the mouse tightens its purse strings.

Over the last 2 years, DIS has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.

Now read: Royal Caribbean stock gains on bottom line beat, bullish forecast


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