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Investors in The Walt Disney Company (NYSE:DIS) had a good week, as its shares rose 3.6% to close at US$188 following the release of its quarterly results. Walt Disney beat expectations by 2.3% with revenues of US$16b. It also surprised on the earnings front, with an unexpected statutory profit of US$0.01 per share a nice improvement on the losses that the analysts forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Walt Disney's 25 analysts is for revenues of US$69.7b in 2021, which would reflect a decent 15% increase on its sales over the past 12 months. Earnings are expected to improve, with Walt Disney forecast to report a statutory profit of US$1.09 per share. In the lead-up to this report, the analysts had been modelling revenues of US$69.7b and earnings per share (EPS) of US$1.12 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 9.6% to US$201, suggesting the revised estimates are not indicative of a weaker long-term future for the business. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Walt Disney at US$211 per share, while the most bearish prices it at US$116. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Walt Disney shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Walt Disney's growth to accelerate, with the forecast 15% growth ranking favourably alongside historical growth of 5.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Walt Disney is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Walt Disney. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Walt Disney going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Walt Disney has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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