Disney (DIS) will report second quarter earnings tonight after the close. There is a conference call scheduled for 16:30 ET.

Q2 Capital IQ consensus calls for EPS of $0.90 (-44% yr/yr) on revenue of $17.49 bln (+17% yr/yr).

DIS' core business still revolves around its theme parks and its media assets. Revenue in the parks, experiences, and products segment represents approximately 35% of revenue. US theme parks remain closed due to the coronavirus.

TECHS:

Disney beat on EPS and revenues three out of the last four quarters.

DIS has a $183 bln valuation and trades at ~36x FY20 EPS estimates.

Based on the weekly DIS May08 $101.0 straddle, the options market is currently pricing in a move of ~5% in either direction by weekly expiration (Friday).

RESULTS

Walt Disney misses by $0.30, beats on revs; Disney+ subs 33.5 mln

Reports Q2 (Mar) earnings of $0.60 per share, excluding non-recurring items, $0.30 worse than the S&P Capital IQ Consensus of $0.90; revenues rose 20.7% year/year to $18.01 bln vs the $17.49 bln S&P Capital IQ Consensus.

As a result of COVID-19, we closed our domestic parks and resorts, cruise line business and Disneyland Paris in mid-March, while our Asia parks and resorts were closed earlier in the quarter. As a result, volumes were negatively impacted in the quarter. We estimate the total impact of COVID-19 on segment operating income in the quarter was approximately $1.0 billion.

Direct-to-Consumer & International revenues for the quarter increased from $1.1 billion to $4.1 billion and segment operating loss increased from $385 million to $812 million. The increase in operating loss was due to costs associated with the launch of Disney+ and the consolidation of Hulu. Results for the quarter also reflected a benefit from the inclusion of the TFCF businesses due to income at the international channels, including Star.

The company reported Disney+ subs of 33.5 mln; ESPN+ has 7.9 mln subs versus 2.2 mln subs prior; Hulu subs +27% yr/yr to 32.1 mln.

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