Disney Stock Before Q1 Earnings: Buy Now or Wait for Results?

The Walt Disney Company DIS is slated to report first-quarter fiscal 2026 results on Feb. 2.

The Zacks Consensus Estimate for first-quarter fiscal 2026 revenues is pegged at $25.93 billion, suggesting modest growth of 5.01% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved south by 1.9% to $1.56 per share over the past 30 days, indicating a decline of 11.36% year over year.

In the last reported quarter, Disney delivered an earnings surprise of 7.77%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.79%.

Disney provided comprehensive guidance for fiscal 2026, projecting double-digit adjusted earnings per share growth compared to fiscal 2025. For the Entertainment segment, the company expects double-digit percentage segment operating income growth compared to fiscal 2025, weighted to the second half of the year, and an operating margin of 10% for Entertainment DTC SVOD. The Sports segment is projected to achieve low-single digit percentage segment operating income growth compared to fiscal 2025, with growth weighted to the fourth quarter reflecting the timing of rights expenses. The Experiences segment is expected to deliver high-single-digit percentage growth in segment operating income compared to fiscal 2025, weighted to the second half of the year.

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 -6.35% 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

The Walt Disney Company is prepared to report first-quarter fiscal 2026 results, facing a mixed outlook, with streaming gains potentially offset by theatrical headwinds and elevated cruise expansion costs. Following management's guidance from the previous quarter, investors encountered multiple crosscurrents that are likely to have shaped the entertainment giant's performance during the October-December 2025 period.

For the fiscal first quarter, the Zacks Consensus Estimate for Entertainment revenues (which include Linear Networks, Direct-to-Consumer and Content Sales/Licensing and Other Revenues) is pegged at $11.6 billion, indicating an increase of 6.8% year over year.

Direct-to-consumer entertainment operating income was projected at approximately $375 million for the quarter, reflecting continued momentum in Disney's streaming transformation. The platform benefited from premium content launches, including Taylor Swift's The End of an Era docuseries and concert film in December, alongside the November addition of The Fantastic Four: First Steps and Freakier Friday. These releases are expected to have complemented steady subscriber growth across Disney+ and Hulu, though year-over-year comparisons faced pressure from pricing adjustments implemented in October 2025.

The theatrical business presented significant challenges, with management forecasting a $400 million adverse impact compared to the first quarter of fiscal 2025. This headwind stemmed from difficult comparisons to the prior year's blockbuster performances of Moana 2 and Mufasa: The Lion King. The fiscal first quarter's slate featured Tron: Ares in October and late-quarter releases Zootopia 2 (Nov. 26) and Avatar: Fire and Ash (Dec. 19), with box office performance remaining critical for content sales and licensing revenues.

Linear networks faced dual pressures, with management projecting $140 million in lower political advertising revenues versus the prior-year quarter's presidential election cycle. Additionally, the absence of Star India's $73 million contribution created an unfavorable year-over-year comparison following the joint venture transaction.

The consensus mark for the Experiences segment (renamed from Disney Parks, Experiences and Products) revenues is pinned at $9.9 billion, indicating marginal growth of 5.7% year over year.

The Experiences segment navigated expansion investments, with $90 million in pre-opening expenses related to the Disney Destiny and Disney Adventure cruise ships, plus $60 million in dry dock costs. Disney Destiny launched its maiden voyage on Nov. 20, 2025, expanding fleet capacity with the heroes and villains-themed vessel sailing from Port Everglades. Domestic parks benefited from holiday season demand and new attractions, including Zootopia: Better Zoogether! show at Animal Kingdom, though October price increases across tickets and Lightning Lane services potentially tempered attendance growth.

Given these offsetting factors — streaming profitability progress versus theatrical pressures and cruise expansion costs — investors should consider holding existing positions or awaiting clearer visibility on second-half momentum before establishing new stakes, particularly as management weighted fiscal 2026 growth expectations toward the year's latter half.

Price Performance & Stock Valuation

Shares of Disney have lost 7.8% in the past six-month period compared with the Zacks Consumer Discretionary sector’s decline of 7.5%. 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 and Amazon have returned 22.2% and 5.9%, respectively, while Netflix has lost 26.8%.

Disney Underperforms Sector in 6 Months

Valuation-wise, Disney trades at a forward P/E of approximately 16.22x despite achieving streaming profitability and executing massive expansion plans, notably below the Zacks Media Conglomerates industry average of 17.86x.

DIS’ P/E F12M Ratio Depicts Discounted Valuation

Investment Considerations Ahead of Q4 Results

Disney presents a mixed investment case as streaming profitability improves with projected $375 million direct-to-consumer operating income, offset by $400 million theatrical headwinds and $150 million cruise expansion costs. Linear networks face declining political advertising and intensified competition, while parks navigate pricing pressures amid competitive offerings. Management's guidance weights fiscal 2026 growth toward the second half, creating near-term uncertainty. The discounted valuation reflects these crosscurrents, though execution risks remain as Disney balances content investments across streaming, theatrical, and experiences. Investors should weigh streaming momentum and growth initiatives against immediate margin pressures and competitive dynamics before committing capital at current levels.

Final Thought

Given the offsetting dynamics of streaming profitability gains against theatrical pressures, cruise expansion costs, and linear network headwinds, investors should maintain a cautious stance on Disney shares ahead of first-quarter fiscal 2026 results. While the discounted valuation offers potential upside, near-term margin compression and management's second-half weighted growth expectations suggest holding existing positions or awaiting clearer execution on full-year targets before establishing new stakes at more favorable entry points.

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

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