Disney's Q4 Earnings Coming Up: Time to Buy, Sell or Hold the Stock?

The Walt Disney Company DIS is slated to report fourth-quarter fiscal 2025 results on Nov. 13. 

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $22.88 billion, suggesting modest growth of 1.37% from the year-ago quarter’s reported figure. The consensus mark for earnings has remained steady at $1.03 per share over the past 30 days, indicating a decline of 9.65% year over year.

In the last reported quarter, Disney delivered an earnings surprise of 10.27%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.99%.

The entertainment giant provided comprehensive guidance during its third-quarter earnings call, projecting fiscal 2025 adjusted EPS of $5.85, representing an 18% increase over fiscal 2024, with the Experiences segment operating income growth of 8% for the full year. For the Entertainment segment, the company expects Direct-to-Consumer operating income of $1.3 billion and double-digit percentage segment operating income growth overall.

Earnings Whispers for DIS

Our proven model does not predict an earnings beat for Disney this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

DIS has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Walt Disney Company Price and EPS Surprise

The Walt Disney Company price-eps-surprise | The Walt Disney Company Quote

Factors Shaping Upcoming Results

Disney is scheduled to report fiscal fourth-quarter 2025 results, covering the July-September period, and investors may want to exercise caution before making new positions, as both opportunities and headwinds shaped the quarter.

For the fiscal fourth quarter, our model estimates for Entertainment revenues (which include Linear Networks, Direct-to-Consumer and Content Sales/Licensing and Other Revenues) are pegged at $11.01 billion, indicating an increase of 1.7% year over year.

The Direct-to-Consumer segment is likely to have benefited from strategic streaming initiatives. Management projected total Disney+ and Hulu subscriptions to increase by more than 10 million compared to the fiscal third quarter, primarily driven by an expanded Charter distribution deal, while anticipating modest subscriber growth for Disney+ itself, targeting full-year entertainment direct-to-consumer operating income of $1.3 billion. The quarter witnessed the Aug. 21 launch of ESPN's direct-to-consumer streaming service at $29.99 monthly, marking a pivotal shift in Disney's sports strategy. Management also projected 18% Sports segment operating income growth for fiscal 2025, though initial subscriber uptake and ESPN streaming's fiscal fourth-quarter contribution remain uncertain.

Content performance presented mixed dynamics during the quarter. The Fantastic Four: First Steps opened with $117.6 million domestically in late July, representing Marvel's strongest opening of 2025, though its steep second-weekend decline suggested front-loaded performance that might have limited theatrical revenue contribution. The streaming slate expanded with new Marvel content, including Eyes of Wakanda and Marvel Zombies in late August and September, alongside the return of Only Murders in the Building's fifth season, potentially driving engagement and subscriber retention. However, the company anticipated overlapping Inside Out 2's strong performance from the prior year, creating a challenging comparison for content sales and licensing.

Our model estimate for the Experiences segment (renamed from Disney Parks, Experiences and Products) revenues is $8.46 billion, indicating marginal growth of 2.7% year over year.

The Experiences segment faced notable operational pressures despite positive full-year guidance. Reduced crowd levels at Walt Disney World during August and September might have strained segment performance. Management projected approximately $50 million in Disney Cruise Line pre-opening expenses impacting the fiscal fourth quarter. While the company implemented aggressive promotional offers, including discounted multi-park tickets and free dining packages, these tactical measures are likely to have pressured per-capita spending and margins.

Disney also announced during the quarter that it would fully integrate Hulu into Disney+ by 2026, following the June completion of Comcast's stake acquisition, while projecting an approximately $200 million equity loss from the India joint venture driven by purchase accounting amortization. Given these offsetting factors — streaming momentum and Sports growth versus Experiences softness and integration costs — investors should consider waiting for clearer visibility into fourth-quarter performance before establishing new positions in Disney shares.

Price Performance & Stock Valuation

Shares of Disney have declined 0.5% in the year-to-date period compared with the Zacks Consumer Discretionary sector’s growth of 1.8%. Disney operates in a fiercely competitive streaming market dominated by the likes of Amazon AMZN-owned Amazon Prime Video and Netflix NFLX, as well as the growing prominence of services from Apple AAPL, Peacock and HBO Max. Apple, Amazon and Netflix have returned 7.2%, 11.4% and 23.8% year to date, respectively.

Disney Underperforms Sector, Competition Year-to-Date

Valuation-wise, Disney trades at a forward P/E of approximately 16.86x despite achieving streaming profitability and executing massive expansion plans, notably below the Zacks Media Conglomerates industry average of 19.13x.

DIS’ P/E F12M Ratio Depicts Discounted Valuation

Investment Considerations Ahead of Q4 Results

Disney presents a mixed investment opportunity as the fourth-quarter fiscal 2025 results approach. The company's streaming transformation shows promise, with management targeting $1.3 billion entertainment direct-to-consumer operating income for full-year fiscal 2025 and 18% Sports segment growth following ESPN's August launch. However, significant headwinds emerged during the quarter, as theme parks experienced notably reduced attendance levels in August and September, necessitating aggressive promotional discounting that is likely to have pressured margins. While Marvel's Fantastic Four generated strong initial box office results and strategic Hulu integration positions for long-term efficiencies, near-term pressures from $50 million cruise line pre-opening expenses and soft parks performance suggest investors should await greater clarity before initiating positions.

Final Thought

Given the contrasting dynamics between streaming momentum and the Experiences segment softness, investors should maintain existing Disney positions while awaiting fourth-quarter results for clearer directional signals. The company's $5.85 adjusted EPS guidance for fiscal 2025 and strategic initiatives provide long-term optimism, yet near-term uncertainties surrounding parks attendance recovery and ESPN streaming adoption warrant caution. Prospective investors may benefit from waiting for improved visibility before establishing new positions.

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This article originally published on Zacks Investment Research (zacks.com).

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