Disney Stock Before Q3 Earnings: Buy Now or Wait for Results?
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In the last reported quarter, Disney delivered an earnings surprise of 22.88%. The company's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.38%.
The Walt Disney Company Price and EPS Surprise
The Walt Disney Company price-eps-surprise | The Walt Disney Company Quote
Earnings Whispers for DIS
Our proven model does not predict an earnings beat for Disney this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.DIS has an Earnings ESP of -0.61% and a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results
As Disney approaches its third-quarter fiscal 2025 earnings report, several compelling positive factors suggest that investors should anticipate strong results that build on the company's exceptional momentum from recent quarters, creating a buy opportunity ahead of results. Disney's Entertainment segment demonstrated remarkable resilience in the fiscal second quarter, with the segment generating $1.3 billion in operating income, representing a substantial 61% increase year over year. This momentum is expected to have carried forward into the fiscal third quarter as Disney+ launched its always-on perks program in May 2025, providing exclusive offers designed for subscribers and enhancing the customer value proposition.The company's direct-to-consumer segment generated $336 million in operating income in the fiscal second quarter, up dramatically from $47 million a year earlier, with this profitability trend expected to accelerate through the quarter under review as integration efforts between Hulu and Disney+ delivered enhanced user engagement and reduced churn rates.Our model estimates for Entertainment revenues (which include Linear Networks, Direct-to-Consumer and Content Sales/Licensing and Other Revenues) are pegged at $10.84 billion, indicating an increase of 2.5% year over year, driven by continued streaming subscriber growth and improved monetization strategies. Disney+ gained 1.4 million subscribers in the fiscal second quarter while Hulu added 1.3 million subscribers, establishing positive momentum that carried into the to-be-reported quarter amid successful content releases and enhanced user experiences.The Sports segment benefited from ESPN's domestic advertising revenues growing 29% year over year in the fiscal second quarter, with preparations for the ESPN direct-to-consumer flagship service launch creating additional revenue opportunities. ESPN's SportsCenter launched its ambitious 50 States in 50 Days initiative, driving viewership and advertiser engagement that is expected to have enhanced fiscal third-quarter performance.The Experiences segment positioned itself for exceptional third-quarter results following Disney's groundbreaking announcement in May 2025 of its seventh theme park resort in Abu Dhabi, United Arab Emirates, representing the company's first Middle East expansion. This waterfront resort on Yas Island will combine Disney's iconic stories with Abu Dhabi's vibrant culture, accessing one-third of the world's population within a four-hour flight radius. Disney Parks generated nearly $67 billion for the U.S. economy while supporting more than 400,000 U.S. jobs, demonstrating the segment's robust economic impact and growth potential.Our model estimate for the Experiences segment (renamed from Disney Parks, Experiences and Products) revenues is $8.4 billion, indicating marginal growth of 0.3% year over year.Disney delivered strong consolidated second-quarter fiscal 2025 results with 20% growth in adjusted earnings per share and 7% growth in revenues to $23.6 billion. Management's optimistic guidance for high-single digit adjusted EPS growth for fiscal 2025 appears increasingly achievable given the multiple positive catalysts converging in the fiscal third quarter, positioning DIS for another quarter of robust financial performance across all business segments.
Price Performance & Stock Valuation
Shares of Disney have returned 4.7% in the year-to-date period compared with the Zacks Consumer Discretionary sector's growth of 6.3%. Disney operates in a fiercely competitive streaming market dominated by the likes of Amazon AMZN-owned Amazon Prime Video and Netflix NFLX, as well as the growing prominence of services from Apple AAPL, Peacock and HBO Max. While Apple and Amazon has lost 19.2% and 2.1% year to date, respectively, shares of Netflix have returned 30%.
Disney's Year-to-Date Performance
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Valuation-wise, Disney trades at a forward P/E of approximately 18.61x despite achieving streaming profitability and executing massive expansion plans, notably below the Zacks Media Conglomerates industry average of 20.25x.
DIS' P/E F12M Ratio Depicts Discounted Valuation
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Investment Considerations Ahead of Q3 Results
Disney presents a compelling buy opportunity ahead of third-quarter fiscal 2025 earnings, trading at an attractive discount despite multiple catalysts driving growth acceleration. The company's streaming profitability surged to $336 million in operating income, a groundbreaking Abu Dhabi theme park expansion, and access to one-third of the global population, and $63 billion licensing dominance positioning Disney advantageously against the competition. While rivals struggle with streaming losses, Disney's integrated ecosystem of Disney+, Hulu, and ESPN creates sustainable competitive moats. Strong second-quarter momentum with 20% adjusted EPS growth, robust theme park performance, and ESPN's advertising revenues surging 29% establishes powerful fundamentals supporting significant upside potential at current valuations.
Final Thought
Disney's convergence of streaming profitability, international expansion, and robust operational momentum creates an exceptional investment opportunity at current valuations. With multiple growth catalysts accelerating and fiscal third-quarter results positioned to exceed expectations, investors should capitalize on this discounted entry point before markets fully recognize Disney's transformed business fundamentals and earnings potential.
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