ii view: Disney stock rallies 10% amid profit optimism
Shares in this Dow Jones constituent company have fallen during 2025 but reacted well to these results. We assess prospects.
7th May 2025 15:57
by Keith Bowman from interactive investor
Second-quarter results to 29 March
- Revenue up 7% to $23.6 billion
- Adjusted earnings per share up 20% to $1.45
Guidance:
- Now expects full-year adjusted earnings to rise around 16% to $5.75 per share, up from a previous estimate for high single digit growth
Chief executive Bob Iger said:
“Following an excellent first half of the fiscal year, we have a lot more to look forward to, including our upcoming theatrical slate, the launch of ESPN’s new DTC offering, and an unprecedented number of expansion projects under way in our Experiences segment. Overall, we remain optimistic about the direction of the company and our outlook for the remainder of the fiscal year.”
- Invest with ii: Buy US Stocks from UK | Most-traded US Stocks | Cashback Offers
ii round-up:
The Walt Disney Co (NYSE:DIS) today detailed sales and earnings that beat Wall Street forecasts, enabling the entertainment giant to raise its estimate for annual profit growth.
Driven by growth in streaming customers and theme park demand, quarterly revenues to late March climbed 6% year over year to $23.6 billion. That boosted adjusted earnings by a fifth to $1.45 per share. Analysts had expected $23.1 billion and $1.20 per share respectively.
Disney now expects full-year earnings to late September to rise by around 16% to $5.75 per share, up from a previous high single digit growth forecast.
Shares in the Dow Jones company rose as much as 10% in early US trading having come into these latest results down by close to a fifth so far in 2025. That’s similar to fellow streamers Apple Inc (NASDAQ:AAPL) and Prime owner Amazon.com Inc (NASDAQ:AMZN). The Dow Jones index itself is down close to 4% in 2025.
Disney Plus subscribers were up by 1.4 million from the previous quarter to 126 million, with subscribers for services and including Hulu now totalling 180 million. Analysts had expected Disney Plus subscribers to fall to around 123 million.
Profit for the Entertainment division, including both streaming and more traditional linear TV channel services, climbed $0.5 billion from a year ago to $1.3 billion.
Sales at Disney’s Experiences division, including theme parks, rose 6% to $8.9 billion, pushing profit up $0.2 billion from Q2 2024 to $2.5 billion.
Profit for the group’s remaining Sport division fell 12% from a year ago to $687 million, hindered by higher programming and production costs, largely relating to American football games.
ii view:
Started in 1923, Disney brands today include Pixar, Marvell Studios, Lucasfilm, ABC News, and Entertainment and Sports Programming Network or ESPN. Experiences, or theme parks and cruises generated its biggest slug of profits during the 2024 fiscal year at 59%, followed by Entertainment at 25% and Sports the balance of 16%. Geographically, the Americas made most sales in 2024 at 79%, followed by Europe at 11% and Asia Pacific the balance of 10%.
For investors, competition within the streaming sector remains intense, with rivals such as Netflix competing hard. Costs at the Sports division have risen as rivals like Netflix Inc (NASDAQ:NFLX) also compete to air live events. A previous return to the former head Bob Iger raises questions and uncertainty over future leadership, while a forecast dividend yield of around 1% is much less than Sky owner Comcast Corp Class A (NASDAQ:CMCSA) at over 3% and ITV (LSE:ITV) at around 6%.
- Stock market winners and losers during Trump’s first 100 day
- Watch our video interview: how we're playing short-term US market pain
- eyeQ: the Mag 7 stock that’s trading at a big discount
More favourably, Disney’s diversity of operations regularly sees positives for one division countering challenges at another. Growth in streaming customers is still being achieved. A focus on improving group efficiency has been underlined by Mr Iger, while the group’s brand strength is strong.
In all, and despite ongoing risks, a consensus analyst fair value estimate above $120 per share appears to suggest continued long-term optimism on Wall Street.
Positives:
- Geographical diversity, strong brands, and media content bank
- Focus on costs
Negatives:
- Cost pressured consumers may cut entertainment spending
- Intense competition
The average rating of stock market analysts:
Buy
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.