In an impressive display of confidence, Disney presented a rare three-year financial forecast on Thursday, reassuring investors with its long-term growth plans despite current economic uncertainties. Disney’s leadership affirmed that investments in its extensive park expansions, robust film slate, and even traditional television assets are set to drive significant gains in the years ahead. Following the announcement, Disney shares surged by 10% early Thursday, signaling renewed investor optimism.
Strong Quarterly and Annual Performance
Disney’s net income jumped by 74% in the latest quarter, reaching $460 million, or 25 cents per share. This brought its total earnings for the fiscal year to just under $5 billion. For the upcoming fiscal year, Disney expects adjusted earnings per share (EPS) to grow in the high single digits. Looking further ahead, the company is forecasting double-digit adjusted EPS growth for fiscal years 2026 and 2027, which will run through the end of September in those years.
Positive Momentum in Streaming
A major highlight of Disney’s recent performance is the turnaround in its streaming business, which reported its first profitable quarter in June, posting a modest $47 million profit. In the most recent quarter, streaming profits soared to $321 million, contributing to full-year profits of $134 million for this segment. This is a significant improvement from the previous fiscal year when Disney streaming operations reported a substantial $2.6 billion loss.
Forecasts that Disney streaming profits will increase by another $875 million in the new fiscal year, boosting its overall financial performance. This marks a notable milestone, as traditional media giants like Disney have struggled to make their streaming services profitable while competing with industry leader Netflix, which had been the only profitable streaming platform until recently.
Challenges and Wins in Legacy Media
While Disney streaming has become a vital component of strategy, the company continues to face challenges in its cable and broadcast network divisions. These segments have been impacted by a decline in ad sales and the ongoing trend of cord-cutting, where consumers move away from traditional TV services. This shift led to a 38% drop in operating profits from Disney’s cable and broadcast networks.
Despite these challenges, Disney’s content sales, particularly from its film releases, have helped balance the books. The company recorded a $725 million increase in revenue from content sales, fueled by the box office success of recent releases such as Deadpool & Wolverine and Pixar’s Inside Out 2, both of which set new box office records.
Stock Price Rebound and Future Prospects
The recent uptick in Disney’s stock price offers a welcome boost for shareholders, who had seen its value decline by 17% since reaching a 52-week high in April and nearly half since 2021, following the early pandemic recovery. Disney’s forward-looking statements and commitment to growth in key areas, especially streaming, indicate that the company is on track to further strengthen its market position.
With a detailed roadmap for the next three years and confidence in its strategic investments, Disney is providing investors with clear reasons to be optimistic about its future. The company’s diversified growth strategy across parks, Disney streaming, and content creation appears well-positioned to weather ongoing industry shifts, ensuring that Disney remains a formidable player in the entertainment world.
