Disney-Heavy ETFs to Watch Amid Q1 Earnings & CEO Change

On Feb. 2, before market open, the Walt Disney Company DIS reported first-quarter fiscal 2026 adjusted earnings of $1.63 per share, which beat the Zacks Consensus Estimate by 3.8% but decreased 7% year over year.

Revenues rose 5% year over year to $25.98 billion but missed the consensus mark by 0.03%. Net income for the quarter was $2.48 billion, or $1.34 per share, down from $2.64 billion, or $1.40 per share in the same period a year earlier, representing a 4% decline in reported EPS. Disney’s total segment operating income decreased 9% year over year to $4.6 billion in the reported quarter compared with $5.1 billion in the year-ago quarter.

Recently, the Walt Disney Company announced that Josh D’Amaro will take over as CEO, succeeding longtime chief Bob Iger. D'Amaro served as the chairman of Disney Experiences, which witnessed a 6% increase in its revenues year over year to $10.1 billion. According to Motley Fool, as quoted on Yahoo Finance, the leadership transition appears constructive for Disney investors, as D’Amaro’s appointment sends a positive signal.

Disney's Segment Breakdown

Entertainment revenues, which constitute about 44.7% of total revenues, increased 7% year over year to $11.61 billion. However, the Entertainment segment’s operating income plunged 35% year over year to $1.1 billion.

Domestic revenues for Experiences were $6.91 billion, up 7% year over year, while international revenues increased 7% year over year to $1.75 billion in the reported quarter. The segment’s operating income was $3.31 billion, up 6% year over year. The Domestic Parks & Experiences segment reported operating income of $2.15 billion, up 8% year over year. Theme parks and admissions revenues grew 7% to $3.3 billion, while resorts and vacations revenues climbed 9% to $2.41 billion.

Streaming revenues, excluding Hulu + Live TV and Fubo, grew 11% to $5.35 billion, with subscription fees climbing 13% to $4.4 billion. Streaming reported an operating margin of 8.4%. Disney+ and Hulu are on track to merge into a unified app experience later this year. Disney+ and Hulu combined streaming services reported operating income of $450 million, up 72% from $261 million in the prior-year quarter.

Content Sales/Licensing and Other revenues increased 22% year over year to $1.94 billion, reflecting higher theatrical distribution from the releases of Zootopia 2, Avatar: Fire and Ash, Predator: Badlands and Tron: Ares compared with Moana 2 and Mufasa: The Lion King in the prior-year quarter.

Meanwhile, Disney’s Sports revenues, which constitute about 18.9% of revenues, increased 1% year over year to $4.91 billion. However, Sports segment operating income declined 23% year over year to $191 million.

Fiscal 2026 Outlook

For fiscal 2026, Disney expects double-digit adjusted earnings per share growth compared to fiscal 2025. The company plans $9 billion in capital expenditures and $24 billion in content investment across Entertainment and Sports.

For the second quarter of fiscal 2026, Disney expects Entertainment operating income to be similar to the same quarter a year ago, with streaming profit of approximately $500 million, representing a roughly $200 million year-over-year increase.

Disney’s Stock Under the Microscope

Walt Disney currently has an average brokerage recommendation (ABR) of 1.56 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 31 brokerage firms. The current ABR compares to an ABR of 1.57 a month ago, based on 29 recommendations.

Of the 31 recommendations deriving the current ABR, 21 are Strong Buy and four are Buy. Strong Buy and Buy, respectively, account for 67.74% and 12.9% of all recommendations. A month ago, Strong Buy made up 68.97%, while Buy represented 10.34%, indicating that the majority of the analysts remain bullish.

Based on short-term price targets offered by 27 analysts, the average price target for DIS comes to $134.89, representing an increase of 29.43% from its current level, with the forecasts ranging from a low of $77.00 to a high of $160.00. The media giant’s stock is priced at $104.22 (as of market close on Feb. 3). The company has a Zacks Rank #4 (Sell) and a Momentum Score of A.

ETFs to Consider

Below, we focus on ETFs that have exposure to Disney.

Diamond Hill Large Cap Concentrated ETF DHLX has an exposure of 4.57% to Disney.

Invesco S&P 500 Equal Weight Communication Services ETF RSPC has an exposure of 4.52% to Disney.

Motley Fool Value Factor ETF MFVL has an exposure of 4.41% to Disney.

Invesco NASDAQ Internet ETF PNQI has an exposure of 4.35% to Disney.

State Street Communication Services Select Sector SPDR ETF XLC has an exposure of 4.21% to Disney.

Vanguard Communication Services ETF VOX has an exposure of 4.17% to Disney.

iShares Global Comm Services ETF IXP has an exposure of 3.96% to Disney.

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

Zacks Investment Research