Walt Disney Q4 Earnings: Is NYSE:DIS Expensive at 80.3x Forward P/E?

in EARNINGS/INVESTING IDEAS by

The Walt Disney Company (NYSE:DIS) is scheduled to report Q4 earnings results after markets close for trading on November 12, 2020.

The company is expected to report earnings of -$0.65/share on revenue of $14.14 billion. The consensus earnings per share (EPS) of -$0.65/share is based on a poll of 22 analysts and represents a decline in eps of −160.3% over the same quarter last year, when the company reported earnings of $1.07/share.

The revenue forecast of $14.14 billion based on a poll of 18 analysts implies a year-over-year (YoY) decline in revenue of −26.0%. Last year the company reported $19.1 billion in revenue for the quarter.

Expected to report EPS of -$0.65/share for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $14,139.91 $19,100.00 −26.0%
EPS -$0.65 $1.07 −160.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from The Walt Disney Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 -$0.67 $0.08 111.9% Beat
Q2, 2020 $0.90 $0.60 −33.0% Missed
Q1, 2020 $1.44 $1.53 6.3% Beat
Q4, 2019 $0.96 $1.07 11.0% Beat
Q3, 2019 $1.74 $1.35 −22.4% Missed
Q2, 2019 $1.57 $1.61 2.5% Beat
Q1, 2019 $1.57 $1.84 17.4% Beat
Q4, 2018 $1.35 $1.48 9.7% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by increasing 9.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $116.35 $127.61 9.7% Increase
May 5, 2020 $103.18 $100.88 −2.2% Decline
February 4, 2020 $141.32 $141.37 0.0% Increase
November 7, 2019 $131.27 $137.96 5.1% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.87, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.87 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Walt Disney Company is currently trading at $141.79/share, up 11.2% for the day. The company is trading at approximately 90.2% of its 52-week high of $153.41/share. The company’s stock price is up 11.1% since the last earnings report and up 18.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 56.00 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:DIS Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −190.19 and a forward P/E multiple of 80.32.

The Walt Disney Company’s current share price also implies a price-to-book (P/B) multiple of 2.94. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 27, 2020
Stock Price (Current) $141.79
P/E Ratio −190.2x
P/E Ratio (Fwd) 80.3x
PEG Ratio 1.6
Total Debt / Total Capital 21.9%
Levered Free Cash Flow $3.369 billion
EV / EBITDA 25.9x

Finbox

The Walt Disney Company is a large-cap stock with a market capitalization of $230.3 billion and a total enterprise value of $289.3 billion. The company operates in the Communication Services sector and the Entertainment industry.

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. The company’s Media Networks segment operates domestic cable networks under the Disney, ESPN, Freeform, FX, and National Geographic brands; and television broadcast network under the ABC brand, as well as eight owned domestic television stations. This segment is also involved in the television production and distribution; and operation of National Geographic magazines. Its Parks, Experiences and Products segment operates theme parks and resorts, such as Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; Hong Kong Disneyland Resort; and Shanghai Disney Resort; Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions, and Adventures by Disney; and Aulani, a Disney resort and spa in Hawaii, as well as licenses its intellectual property to a third party for the operations of the Tokyo Disney Resort in Japan. The company’s Studio Entertainment segment produces and distributes motion pictures under the Walt Disney Pictures, Twentieth Century Fox, Marvel, Lucasfilm, Pixar, Fox Searchlight Pictures, and Blue Sky Studios banners; develops, produces, and licenses live entertainment events; produces and distributes music; and provides post-production services, including visual and audio effects. Its Direct-To-Consumer & International segment operates international television networks and channels comprising Disney, ESPN, Fox, National Geographic, Star, and Other India Channels; direct-to-consumer streaming services consisting of Disney +, ESPN+, Hotstar, and Hulu; and operates branded apps and Websites, such as Disney Movie Club and Disney Digital Network, as well as provides streaming technology support services. The company was founded in 1923 and is based in Burbank, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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