Walt Disney (NYSE:DIS) plans to release its results for the second quarter of fiscal 2020, which ended in March 2020, after the market close today. Notably, the earnings report comes at a challenging time for the company. For example, Disney has been forced to suspend certain business operations due to the coronavirus outbreak.
The pandemic has also taken a toll on Disney stock. Investors are concerned about how the virus will impact the company’s business. At $103 per share at the closing on Monday, Disney stock has fallen by about 30% year-to-date.
Here are three things investors need to know as they wait for Disney’s earnings report.
What does Disney expect?
Investors will be watching the numbers closely in Disney’s earnings report. The report will likely provide clues about how COVID-19 has impacted the company’s business.
Wall Street expects Disney to post EPS of $0.90 on revenue of $17.5 billion. A year ago, Disney delivered EPS of $1.61, which topped consensus estimate at $1.58. The company reported revenue of $14.9 billion, which beat Wall Street expectation at $14.4 billion.
Disney’s upcoming earnings report will show the impact of closed theme parks and the halt on film production and releases amid COVID-19. Notably, the theme park and studio entertainment divisions contributed about 55% of Disney’s total revenue in the previous quarter, which ended in December 2019. Therefore, weakness in these two divisions could weigh heavily on Disney’s earnings results.
Disney+ is the bright spot in a challenging period
So far, Disney+ has been a bright spot amid the pandemic. The service’s growth has been exceeding expectations. Disney+ will likely draw a lot of investor attention when the earnings report lands. Last month, the company reported that Disney+ had crossed 50 million subscribers and marked an important milestone.
Disney+ launched in a crowded market dominated by Netflix (NASDAQ:NFLX), but it has been quickly making its mark. As a result, the service has been a source of hope for Disney investors.
Fundraising and cost-cutting
Disney’s earnings report comes at a time when the company has sought to shore up its liquidity amid the pandemic. The company raised about $7.3 billion in the past few months through bond sales. Since business suspensions have reduced the cash flow from operations, Disney had to find other ways to raise cash.
In addition to fundraising, the company has also turned to cost controls, including asking its executives to take pay cuts.