Entertainment and mass media giant Walt Disney Company posted its first quarter fiscal 2017 earnings report on Tuesday with better-than-expected earnings but was unable to meet analyst expectations for its revenues.
Due to the missed revenues, the company’s stock fell to 2% after the release of its earnings. Disney’s deficit in their revenue for the first quarter was attributed to the lagging performance of its sport giant TV channel ESPN.
Despite this, DIS is still experiencing mixed reception both from the bulls and bears after its earnings call as investors weigh in the company’s future, especially with the announcement that Disney CEO Bob Iger has announced the extension of his term as Disney’s chief executive in order to aid in the company’s recovery and until he finds a replacement. With the recent events, where is the company’s stock headed towards in the future?
Disney’s Stock Overview
After the release of Disney’s earnings report, its stock opened at $109.65 on Wednesday, reached a high of $109.73, but eventually closed down at $109.00 flat. DIS closed 0.52% down or $0.57 lower. Its market cap was at $172.64 billion.
The Fibo Retracements are between swing low from November 09 (before the Q4 earnings) and swing high on February 01 (prior to Q1 speculations). Investors looking to buy the stock can do so if its price will hit below resistance level of 16.40% (0.786), while investors who want to reduce holding of the stock can sell their stock if it rises above the 21.02% (1) level. Meanwhile, its RSI is currently at 55.6221.
Disney’s stock initially plunged 2%, almost reaching level $107 upon its earnings release, but was able to regain momentum after Iger announced promising remarks regarding his extended stay as CEO of the company.
The entertainment conglomerate has been the Dow’s strongest performer in the market during the post-election rally. From November, the company’s stock has already climbed 22% from its previous October plunge. However, DIS started to fall in the start of February this year as investors and analysts begin to weigh and expect the company’s earnings report.
Last November 10, due to the impressive Q4 2016 of Disney, its stock started to rally from its previous poor performance in the market, and was able to climb almost 16% to date since its last quarterly report prior to the first quarter 2017 earnings. DIS previously lost investor confidence due to uncertainties over its ESPN TV channel.
“We’re very pleased with our financial performance in the first quarter. Our Parks and Resorts delivered excellent results and, coming off a record year, our Studio had three global hits including our first billion-dollar film of fiscal 2017, ‘Rogue One: A Star Wars Story’,” stated CEO Robert Iger in the earnings release.
Disney Q1 net income fell 14% from $2.88 billion to $2.48 billion in the most recent quarter. Its earnings per share reached $1.55 in $14.78 billion in revenue. Although earnings were higher than analysts’ estimate, which was $1.49 EPS, the revenue missed forecast of $15.26 billion, down by 3% year-on-year. But even though the overall revenues for the quarter dropped, its Parks and Resorts revenue soared 6% to $4.55 billion, compared to last year’s report of $4.28 billion.
Meanwhile, segment operating income was down 7%, from $4.28 billion to $3.96 billion. Its media networks also declined 2% to $6.2 billion, while segment operating income decreased 4% to $1.4 billion. The sharp plunge in operating income was attributed to a decrease at ESPN due to higher programming costs and lower advertising revenue.
For its Studio Entertainment sector, although the film hit ‘Rogue One: A Star Wars Story’ reached the billion mark, its performance did not match the exceptional reception of its predecessor ‘Star Wars: The Force Awakens’ the previous year.
Iger’s Extension of Term
On Tuesday, CEO Iger mentioned that if it were to help the performance of the company to recover, he was ‘open to’ extend his stay in Disney, but also added that there was nothing to announce until his contract ends in June 2018.
“I am going to do what is in the best interest of this company. While I am confident that my successor is going to be chosen on a timely basis and chosen well, if it is in the best interest of the company for me to extend my term, I am open to that,” Iger said during a conference call with analysts.
Upon reports of the possible extension of Iger’s stay in the company, investors regained some of their confidence over the company’s stock.
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