Disney Slips on Q4 Earnings Miss: ETFs in Focus
The Walt Disney Company DIS reported dismal fourth-quarter 2022 results after the closing bell on Tuesday, wherein it missed estimates for both earnings and revenues. However, the company posted record sales and the best revenue growth in more than 25 years for the fiscal year.
Given the fourth-quarter earnings miss, shares of Disney tumbled as much as 10% in after-hours trading. This has put ETFs with the largest allocation to this global media and entertainment company in focus for the days ahead. These funds include Invesco NASDAQ Internet ETF PNQI, Fidelity MSCI Communication Services Index ETF FCOM, Invesco Dynamic Media ETF PBS, Vanguard Communication Services ETF VOX and Communication Services Select Sector SPDR Fund XLC.
Earnings in Detail
The company reported earnings per share of 30 cents, lagging the Zacks Consensus Estimate of 50 cents and decreasing 13% from the year-ago quarter. Revenues climbed 9% year over year to $20.1 billion and fell short of the Zacks Consensus Estimate of $21.1 billion (read: October Marks Best Month for Value ETFs Since 1978: Top Funds).
Disney added 14.6 million new subscribers, including to Disney+, Disney+ Hotstar, Hulu and ESPN+, taking total worldwide subscribers to 235 million at the end of the quarter. Hulu had 47.2 million subscribers, up 8% year over year, ESPN+ had 24.3 million users, up 42% year over year, and the Disney+ user base increased 39% from the year-ago quarter.
Disney warned that it expects core Disney+ subscriber growth, along with Hotstar subscriber numbers, to be lower in the first quarter.
ETFs in Focus
Invesco NASDAQ Internet ETF (PNQI)
Invesco NASDAQ Internet ETF follows the Nasdaq CTA Internet Index, which measures the performance of companies engaged in Internet-related businesses listed on the New York Stock Exchange, NYSE American, Cboe Exchange or The Nasdaq Stock Market. The product holds 81 stocks in its basket, with Netflix occupying the top position with 8.6% of assets.
Invesco NASDAQ Internet ETF has amassed $406.2 million in its asset base and charges 60 bps in fees per year. The fund trades in a light volume of 31,000 shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Fidelity MSCI Communication Services Index ETF (FCOM)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 118 stocks in its basket, with Disney occupying the fourth position at 6.1%.
Fidelity MSCI Communication Services Index ETF has amassed $472 million in its asset base and trades in an average daily volume of 99,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
Invesco Dynamic Media ETF (PBS)
Invesco Dynamic Media ETF provides exposure to companies engaged in the development, production, sale and distribution of goods or services used in the media industry by tracking the Dynamic Media Intellidex Index. It holds 31 stocks in the basket, with Disney taking the fourth position with a 5.1% allocation (read: Netflix Returns to Growth, Shares Spike: ETFs to Tap).
Invesco Dynamic Media ETF has been able to manage $30.1 million in its asset base while seeing a lower volume of about 6,000 shares a day. It has 0.63% in expense ratio and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Vanguard Communication Services ETF (VOX)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Disney takes the fourth spot with a 5.5% share. Interactive media & services is the top sector, accounting for 41.4% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.
Vanguard Communication Services ETF has AUM of $2.4 billion and trades in a good volume of 351,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Communication Services Select Sector SPDR Fund (XLC)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $7.8 billion in its asset base. It follows the Communication Services Select Sector Index and holds 25 stocks in its basket, with Disney occupying the ninth position at 5.1%. About 38.1% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: 5 Sector ETFs That Could Flourish in November).
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 6.8 million shares. It has a Zacks ETF Rank #3.
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The Walt Disney Company (DIS) : Free Stock Analysis Report
Invesco Dynamic Media ETF (PBS): ETF Research Reports
Invesco NASDAQ Internet ETF (PNQI): ETF Research Reports
Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
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