ii view: Disney again ups expected annual shareholder returns

Third-quarter results to 27 June

• Revenue up 7% to $25.25 billion
• Adjusted earnings up 28% to $2.06 per share

Guidance:

• Continues to expect growth in full year adjusted earnings per share of 12%
• Now targeting share buybacks for the full year 2026 of at least $9 billion, up from a previous $8 billion

CEO Josh D’Amaro said:

“Our strong fiscal Q3 results and reiterated full-year outlook reinforce our confidence that we are uniquely well positioned.

“Together, our results show a unique ability to engage consumers at scale, both digitally and physically, even amid macro uncertainty.”

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ii round-up:

The Walt Disney Co (NYSE:DIS) today upped its estimate for 2026 share buybacks for the second quarter in a row as it maintained hopes for double-digit growth in annual earnings under relatively new head Josh D’Amaro.

Demand for parks and streaming services fed in a 7% gain for third-quarter revenues to late June, pushing adjusted earnings up 28% to $2.06 per share. Analysts had expected an outcome of $1.86.

Disney now expects total share buybacks for the full year 2026 of at least $9 billion, up from a previous estimate of $8 billion, and $7 billion the quarter before that. 

Shares for the Dow Jones company rose 3% in post results US trading having come into these latest numbers down around 14% so far in 2026. That’s similar to shares of Universal parks and Sky TV owner Comcast Corp Class A (NASDAQ:CMCSA). The Dow is up 12% year-to-date.

Disney operates across the three divisions of Experiences, taking in its theme parks, Entertainment and including streaming services, as well a Sports division and respective TV channels. Relatively new CEO Josh D’Amaro continues to forecast growth of 12% in adjusted earnings for the full year 2026.

Growth in Experience related sales led the way during the quarter, gaining 10% to $9.97 billion. Entertainment revenues and aided by the release of Toy Story 5 and price rises for Disney Plus, rose 6% to $11.3 billion. Sports related sales improved 4% to $4.5 billion.

Former CEO Bob Igor headed Disney on and off for close to 20 years. Focuses under the new head include investing in intellectual property, reaching more consumers, and using advanced technologies to power storytelling and expand monetization and returns.

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results. Fourth quarter results are likely mid-November.

ii view:

Founded in 1923 by brothers Walt and Roy, Disney today employs around 190,000 people. Group brands include Pixar, Marvell Studios, Lucasfilm, ABC News, Hulu and Entertainment and Sports Programming Network or ESPN. Geographically, the Americas generated most revenues during its last financial year at 81%, followed by Europe at 12% and Asia the balance of 7%.

For investors, elevated energy prices due to the war in the Middle East are squeezing consumer incomes. Trump trade policy potentially deterring overseas visitors to the US and the group’s theme parks is not to be ignored. AI and its potential impact on film making is currently difficult to predict. Exposure to economically sensitive advertising sales persists, while costs for sports broadcasting rights remain elevated given their pull-on live audiences and with players such as Amazon.com Inc (NASDAQ:AMZN) Prime and Netflix Inc (NASDAQ:NFLX) now involved.

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On the upside, new head Josh D’Amaro is attempting to rejuvenate group strategy including increased investments in technology such as AI. An early focus on costs was made by the new CEO given previously announced job losses. The group’s diversity of operations regularly sees positives for one division countering challenges for another, while an estimated future dividend yield of around 1.5% compares to no current dividend payments at fellow streamers Netflix and Amazon.

In all, and despite ongoing risks, a consensus analyst estimate of fair value sat at over $125 per share will likely see fans of this highly diversified entertainments giant staying firmly interested.

Positives:

• Geographical diversity, strong brands, and media content bank
• Rejuvenated strategy under new CEO

Negatives:

• Cost pressured consumers may cut entertainment spending
• Intense competition

The average rating of stock market analysts:

Buy