The Walt Disney Company is set to report its fourth quarter earnings tomorrow. Thomas Reuters is estimating earnings per share of 46 cents, which is the exact same number that Disney reported in the fourth quarter of 2009. Shares of Disney closed up 13 cents today, settling at $36.99. The 52-week range is $28.71 to $37.98, meaning shares are trading near the 52-week high and way up from the $16.77 low seen back in February of 2009. Opinions of the stock are generally favorable. Standard and Poor’s rates the stock a “Buy” with a $42 price target. The Street also rates shares of Disney a “Buy,” with a price target just north of $48. We also have “Buy” ratings from Credit Suisse, Ford Equity Research, MarketEdge, Deutsche Bank, and others. Price targets range from $36 to $44. 24/7 Wall Street just named the Disney company as one of ten stocks to own for the next decade yesterday. They are expecting dividend increases going forward.
Why do we care you ask? Well, the health of the Disney company is important to our beloved theme parks. If profits and revenue are down, Disney will likely continue heavy discounting. Of course, discounting also comes with fewer shows, less expansion, and a lack of new attractions. If revenue and profits are strong, discounting may ease a little, but we may begin to hear about new rides and future plans for the Parks. It wasn’t too long ago that Disney announced that they would be ending heavy promotions and discounting at the Disney-owned resorts and theme parks. (Un)Fortunately, the economic slowdown was greater than most people had predicted, and Disney has gone so far as to expand the Free Dining promotion well into the fall of 2010. If things are looking up, Disney can always limit the number of heavily discounted rooms and packages, but the economy is not showing signs of improving dramatically enough to warrant a major change in strategy. I’ll be back tomorrow with a full rundown of the announcement and what we can expect to see in the future.
It has been a somewhat rocky year for the Walt Disney Company overall. Its film division has had two major successes, but also a number of serious flops. Toy Story 3 and Alice in Wonderland were huge box office successes, accounting for more than two billion dollars in revenue at the box office worldwide. That doesn’t include DVD and Blu-ray sales, merchandising, or anything else. Disney now holds the number four (Pirate’s of the Caribbean: Dead Man’s Chest), number five (Toy Story 3), and number six (Alice in Wonderland) spots for all-time box office returns. Those numbers are offset by two major box office bombs – The Sorcerer’s Apprentice and Prince of Persia: The Sands of Time. Prince of Persia did do well overseas, but with an estimated production cost of over 200 million dollars, the domestic take of just over 90 million was significantly less than anyone had hoped for. With a production budget of 150 million, The Sorcerer’s Apprentice grossed just 63 million dollars domestically. Luckily, foreign receipts added an additional 150 million. To put things in perspective, Toy Story 3 brought in 110 million over its opening weekend, just in the United States. That’s nearly twice what The Sorcerer’s Apprentice made in its entire cinematic run and more than Prince of Persia made domestically as well. Disney has two more movies coming out in 2010 – Tangled and Tron: Legacy. It’s not clear yet how good either movie will do. The plot for Tangled may be too familiar and the voice actors aren’t necessarily superstars. Yes, Mandy Moore and Zachary Levi have pleasant voices, but it’s nowhere near the star power you would find from box office successes like Madagascar, which stars well known actors like Ben Stiller, Chris Rock, Sacha Baron Cohen, and others. However, a good story and funny jokes will more than make up for a lack of name recognition. Tron: Legacy may suffer a similar fate. Nerds everywhere are excited, but it’s unclear whether Disney will be able to convince the uninitiated that the family wants to spend $60+ to see it over the holidays.
Disney also has ABC, ESPN, Marvel, Disney Music Group, Disney Theatrical Productions, Touchstone Pictures, Buena Vista Studios, Disney Interactive, and plenty of other sources of revenue.
We’ll see how it all breaks down tomorrow.