Why Is Disney (DIS) Down 0.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Walt Disney (DIS). Shares have lost about 0.9% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Disney due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Disney Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

The Walt Disney Company reported first-quarter fiscal 2026 adjusted earnings of $1.63 per share, which decreased 7% year over year. The figure beat the Zacks consensus estimate by 3.8%.

Revenues were $25.98 billion, up 5% year over year. The figure 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. Adjusted EPS excluded certain items, including tax charges related to the Fubo deal.

Segment Performance Overview

Entertainment revenues (44.7% of total revenues) increased 7% year over year to $11.61 billion. Revenues from Linear Networks were not separately disclosed in the quarter. Direct-to-Consumer streaming revenues increased 11% year over year to $5.35 billion. 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.

Sports revenues (18.9% of total revenues) rose 1% year over year to $4.91 billion.

Experiences revenues (38.5% of total revenues) increased 6% year over year to $10.01 billion. Domestic revenues 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. Revenues from Disney's Consumer Products remained flat at $1.34 billion.

Entertainment Segment Results

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. Entertainment segmental operating income declined 35% year over year to $1.1 billion. The entertainment segment reported an operating margin of 9.5%. Streaming operating income was $450 million, while the rest of the entertainment segment generated operating income of $650 million, down 55% year over year.

The decrease in Entertainment’s operating income was driven by several factors. The temporary carriage dispute with YouTube TV had an approximately $110 million impact on the Sports segment. There was a decline in advertising revenues due to the Star India transaction, along with higher programming and production costs related to the Fubo deal. Price increases at streaming services led to higher subscriber-based license fees, while production, marketing, technology and distribution costs also increased.

Advertising revenues fell 6% year over year to $1.8 billion, reflecting the inclusion of Star India in the prior year, higher political advertising revenues in the prior-year period, and the Fubo deal. Subscription and affiliate fees increased 8% to $7.25 billion, driven by rate increases, subscriber growth and the Fubo deal.

Streaming Performance and Strategy

Streaming revenues, excluding Hulu + Live TV and Fubo, grew 11% to $5.35 billion, with subscription fees climbing 13% to $4.4 billion and advertising and other revenues up 4% to $922 million. Streaming reported an operating margin of 8.4%. Disney no longer discloses detailed subscriber metrics or average revenue per paid subscriber for Disney+ and Hulu. The company has transitioned away from reporting these individual metrics as it focuses on unified streaming profitability.

Disney+ and Hulu combined streaming services reported operating income of $450 million, up 72% from $261 million in the prior-year quarter. Disney+ and Hulu are on track to merge into a unified app experience later this year. Hulu has replaced the Star brand in international markets, and Disney+ has rolled out new homepage updates, including better personalization and improved recommendations.

Sports Segment Performance

Sports segmental operating income was $191 million, down 23% year over year from $248 million. The decline reflected increased programming and production costs driven by price increases and sports rights costs, and a 2% decrease in subscription and affiliate fees to $2.98 billion due to fewer subscribers, the YouTube TV carriage dispute and the Star India deal. This was partially offset by advertising revenue growth of 10% to $1.48 billion due to higher rates and fewer regular season NBA games due to timing under its new media rights deal.

Experiences Segment Drives Growth

Experiences’ 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, driven by higher volumes from increased passenger cruise days, attendance and occupied room nights, as well as increased guest spending. Additional passenger cruise days reflected the launches of the Disney Treasure in December 2024 and the Disney Destiny in November 2025. Increased attendance also reflected the comparison to Hurricane Milton in the prior-year quarter.

The International Parks & Experiences segment reported operating income of $428 million, up 2% year over year. Consumer Products’ operating profit increased 3% year over year to $732 million. Theme parks and admissions revenues grew 7% to $3.3 billion, while resorts and vacations revenues climbed 9% to $2.41 billion, and parks & experiences merchandise, food and beverage revenues jumped 8% to $2.35 billion. Parks & experiences licensing revenues were flat at $610 million.

Balance Sheet and Cash Flow

As of Dec. 27, 2025, cash and cash equivalents totaled approximately $5.7 billion. Cash provided by operations fell 77% to $735 million in the first quarter. Disney expects $19 billion in cash provided by operations for fiscal 2026, which includes the impact of $1.7 billion in taxes deferred from fiscal 2025 to 2026 as a result of tax relief granted due to the California wildfires.

Fiscal 2026 Outlook

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. The rest of the entertainment segment is expected to post an operating profit of $700 million. Sports revenues are expected to be similar to a year ago, but operating income will decline by $100 million due to higher rights expenses. Experiences operating income growth will be modest due to international visitation headwinds at U.S. theme parks, pre-launch costs from the Disney Adventure cruise ship, and pre-opening costs from Disneyland Paris' World of Frozen attraction.

For fiscal 2026, Disney expects double-digit adjusted earnings per share growth compared to fiscal 2025. The Entertainment segment is projected to achieve double-digit operating income growth, weighted to the second half of the year, with an SVOD operating margin of 10%. The Sports segment is expected to deliver low single-digit operating income growth for the full year. The Experiences segment is anticipated to achieve high-single digit percentage growth in operating income compared to fiscal 2025, weighted to the second half of the year.

Disney is on track to repurchase $7 billion of stock in fiscal 2026 and expects $19 billion in cash provided by operations. The company plans $9 billion in capital expenditures and $24 billion in content investment across Entertainment and Sports.

Strategic Developments and Leadership Transition

Disney acquired a 70% stake in Fubo, an Internet TV bundle provider, in a deal that closed in October 2025, which is reflected in the quarter's results. The company continues to execute on its strategic priorities across streaming services, traditional entertainment, sports programming, and theme park experiences. Disney plans to open a new theme park in Abu Dhabi to expand its global reach.

Disney plans to announce CEO Bob Iger's successor in early 2026, with the company's board set to vote on the matter in early February 2026. Experiences chairman Josh D'Amaro is currently considered the frontrunner to replace Iger.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -6.05% due to these changes.

VGM Scores

Currently, Disney has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Disney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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