The New Year is almost upon us, and Disney hasn't forgotten about its loyal shareholders! 🎊
Disney shareholders are finally getting some relief after a rough few years, with the stock gaining a substantial 16% over the past month. This late-year boost has come just in time for the approach of 2025. To add to the cheer, Disney bumped up its dividend by an impressive 33% to $1.
It seems that the situation is improving, but let's not get overly enthusiastic. While Disney's stock has seen an uptick, it's still 42% away from its five-year highs. The excitement among investors is understandable, but there's still plenty of work to be done to gain the full confidence of the market and achieve a complete rebound.
CEO Bob Iger seems to have a good grasp of what's needed to get the Disney machine running smoothly, although some changes were already underway before his return two years ago. Revenue is on the rise, parks are picking up, and most importantly, streaming is finally showing profits.
In the 2024 fiscal fourth quarter (ending Sept. 28), sales jumped 6% year-over-year, and earnings per share (EPS) increased an impressive 79% to $0.25. Parks saw a modest 1% boost over the previous year, but entertainment, which encompasses all of Disney's media, surged 14%.
Streaming operating income reached $321 million and turned a profit for the first time. Entertainment streaming, which excludes sports, was already showing profits in the third quarter, but the combined effort now brings in money, a milestone the market has been eagerly anticipating.
Disney+ Core streaming subscriptions climbed by 4.4 million to 122.7 million in the fourth quarter, thanks in part to the introduction of an ad-supported tier. Streaming ad sales rose 14% year-over-year during the quarter. Combined with Hulu, entertainment streaming subscriptions totaled 174 million.
Disney's strong quarter earned it a significant market gain, but it needs all its components to work together and consistently deliver results to truly regain the market's enthusiasm.
While revenue growth as a whole was positive, it wasn't exactly exceptional. Profitability improvements were encouraging, but net income is still 37% lower than it was 10 years ago. That's why streaming's profitability was such a crucial factor, and management is promising a profitability outlook extending into 2027.
For 2025, Disney is aiming for an adjusted EPS increase in the low single digits and for entertainment streaming operating income to more than triple. For 2026, it expects adjusted EPS and entertainment streaming operating income to surge by double digits. For 2027, it's projecting double-digit growth in adjusted EPS.
Disney's recent success can be attributed to the smashing performance of its top films in 2025. Inside Out 2 and Deadpool & Wolverine have maintained their leading positions, even with competition from Universal's Wicked (owned by Comcast). Additionally, Moana 2 broke the record for the highest-grossing Thanksgiving five-day opening and has now landed at No. 5.
Iger mentioned that every film Disney produces contributes significantly to the company's overall performance, as Disney's content and characters are broadly monetized through park rides, streaming content, products, and more. The original Moana is currently the most-streamed movie of all time.
With Mufasa: The Lion King expected to be another box office sensation, and a promising slate of films lined up for 2025 and beyond, Disney appears well-positioned for further growth in 2025. However, with any investment, it's important to consider both the positive and negative factors at play. If you have a risk tolerance and a long-term perspective, then you might want to take a chance on Disney.
The improvement in Disney's financial situation has led some investors to consider reinvesting their money in the company, seeing potential returns in the future. To achieve its goals for 2025 and beyond, Disney needs to continue delivering profitable results across all its streams, including movies, streaming services, and theme parks.
