Disney (DIS): Buy, Sell, or Hold Post Q4 Earnings?

Ladies and gentlemen, buckle up! We're diving headfirst into the world of Disney (DIS) post-Q4 earnings. The House of Mouse has just released its financial report, and it's a mixed bag of tricks. Let's break it down and see if Disney is a buy, sell, or hold.

First things first, let's talk about the elephant in the room: revenue growth. Disney reported a 6% increase in revenue for Q4, reaching a whopping $22.6 billion. That's a solid number, but it's not exactly setting the world on fire. Compared to the consumer discretionary sector's benchmark, Disney's 4.2% annualized revenue growth over the last five years is a bit underwhelming. But don't count Disney out just yet!

Now, let's talk about earnings per share (EPS). Disney's EPS for Q4 increased by a staggering 79% to $0.25. That's a massive jump, and it shows that Disney is effectively managing its costs and improving profitability. This is a huge win for the company, and it's a sign that Disney is on the right track.

But here's where things get a bit tricky. Disney's Experiences segment, which includes theme parks and consumer products, saw a 1% revenue growth to $8.24 billion. That's not exactly a home run, but it's not a strikeout either. The key drivers behind this revenue growth and profitability include higher guest spending and strategic expansions. But the sustainability of these drivers is a concern.

Theme parks have experienced a slowdown, particularly in the U.S., following the post-Covid surge in attendance. Companies have warned that this lull will carry over to future quarters. And let's not forget about the international parks, where operating income fell 32% due to a decline in attendance and in guest spending as well as increased costs. This highlights the vulnerability of the international market to economic downturns and competitive pressures.



But Disney isn't sitting on its hands. The company remains confident in the future of its experiences business with the expansion of its cruise line and additions to its theme parks. These strategic initiatives are expected to drive future growth and profitability. And let's not forget about Disney's DTC streaming businesses, which showed improved profitability with operating income of $321 million in Q4. This is a positive sign, as the company continues to invest in its streaming services to compete with other major players in the industry.

Now, let's talk about the elephant in the room: debt. Disney has a total shareholder equity of $106.7 billion and total debt of $45.3 billion, resulting in a debt-to-equity ratio of 42.4%. The company's interest coverage ratio is 7.7, indicating that it has sufficient earnings to cover its interest payments. But the company's cash and short-term investments of $5.5 billion suggest that it has limited liquidity compared to its debt obligations.

So, what's the verdict? Is Disney a buy, sell, or hold? Well, it's not a no-brainer, but it's not a disaster either. Disney's recent financial performance shows some positive signs, such as improved profitability in its streaming businesses and strong content sales. But the company faces challenges in its theme parks segment and modest revenue growth compared to industry benchmarks.



Disney's future prospects will depend on its ability to continue investing in its content offerings, manage its costs effectively, and navigate the competitive landscape in the entertainment industry. So, if you're looking for a safe bet, Disney might not be the stock for you. But if you're willing to take a chance on a company with a rich history and a bright future, Disney could be a great addition to your portfolio.

So, what are you waiting for? Do your own research, and make your move! But remember, this is not financial advice. I'm just a guy with a keyboard and an opinion. The final decision is yours and yours alone. Good luck, and happy investing!