Financials Analysis
We have taken a look at the financial outlook of the company based on its previous quarterly results compared to the same period of the prior year.
In Q3 of 2024, the company recorded double-digit growth of 19% for its total segment operating income and a 35% increase for adjusted EPS. As a result of its Direct-to-Consumer and Content Sales, the entertainment segment's operating income almost tripled YoY.
Inside Out 2, which has become the highest-grossing animated movie of all time, drove strong performance with regard to content sales. Around the time of the film’s release, the first film ‘Inside Out’ (2015), helped drive more than 1.3 million Disney+ sign-ups and generated more than 100 million views globally since the first ‘Inside Out 2’ trailer was released.
On the earnings front itself, revenues for Q3 rose to $23.2 billion from $22.3 billion in the prior year. Income before tax increased to $3.1 billion versus a loss of $0.1 billion in the prior year. This helped with seeing a diluted EPS of $1.43 compared to a loss of $0.25 in Q3 of 2023.
Based on the quick overview of the financials above, Disney is demonstrating signs of growth with what seems like finally positive earnings compared to the prior year.
Technical Analysis
From a technical aspect, it seems like Disney’s share price has formed a higher low on the weekly chart, in theory. Currently, its shares are trading at around $96.92 a share and are up almost 1% in the pre-market to kick start the week. After rising as much as 35% from January to April, the entertainment giant’s shares are now only up 7% year-to-date following a heavy sell-off after it reported earnings in May. This was partly due to revenue miss and some revision to its guidance for the rest of the year. However, it seems like the stock has picked up some momentum as of late, with Seaport Research upgrading the company to a ‘Buy’ today with a price target of $108. We can see that a support level has been established around $83.92 and after the break above the resistance of $91.88, the price is pushing higher. The next resistance point that will certainly be in focus is the area of $98.25(Nov 23 High) to $98.97 (50-day moving average). A break past this point with a close above the 50MA would likely entice further buying in the stock, especially as earnings are not due for another 5 weeks. Although, it’s important to note that this area may prove challenging in the near term and possibly even before the next earnings report. Towards the downside, only a move below the previous resistance of $91.88 would force investors to look for support around $86.59. A break below $86.59 would very likely increase the possibility of investors dumping the stock to look for opportunities elsewhere as head into the final quarter of the year. Nonetheless, the technical indicators may offer additional support in the near term as the MACD is seen turning positive once again, though still below the zero line. Additionally, the RSI is no longer bearish as it reads 50.
Based on information collected by TipRanks, Disney has an average Analyst Price Target of $115.17 for the next 12 months. In our view, from a financial aspect, this price target will be more achievable if the company can demonstrate further growth within its upcoming earnings report. From a technical perspective, if the stock can move back above its 50MA for additional support, the risk to reward will be more favourable.
*None of the above information is to be taken as financial advice. All investments carry risk*
(Sources: TipRanks.com, thewaltdisneycompany.com)
