Will Earnings Give Walt Disney (DIS) Stock a Much-Needed Jolt?
Our preview of the upcoming week's earnings reports include Walt Disney (DIS), Planet Fitness (PLNT), Coinbase Global (COIN) and Airbnb (ABNB).
Walt Disney (DIS, $177.07) is one of the few mega-cap stocks scheduled to report its financial results this week as the earnings calendar begins to thin. The entertainment giant is slated to step into the earnings confessional after the market closes on Thursday, Aug. 12.
Following a roughly four-month stretch that took the Dow stock from $118.50 per share in late October to its all-time high above the $200 mark in mid-March, DIS has mostly chopped around the $180 region. Shares are in the red year-to-date heading into this week's earnings report.
Disney's fiscal second-quarter results released in May did little to snap the stock out of its funk. While earnings beat expectations, revenues fell short, with DIS bringing in just $15.6 billion – a 13% year-over-year decline. Certainly part of this miss was due to ongoing COVID-19-related woes.
As CEO Bob Chapek noted in the wake of those quarterly results: "The most significant impact was at the Disney Parks, Experiences and Products segment where since late in the second quarter of fiscal 2020, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended."
However, the company also fell short on its Disney+ subscription additions. Wall Street has watched Disney's streaming service metrics closely during the pandemic to see how they offset declining revenues due to theme-park closures and restrictions.
For the company's fiscal third quarter, Needham analysts Laura Martin and Dan Medina are expecting Disney+ subscribers to reach 134.6 million, representing a 122.5% improvement from the year-ago period. The analysts also project quarterly revenues of $16.7 billion, up 41.8% year-over-year (YoY).
However, Martin and Medina maintain a tepid Hold recommendation on Disney.
"Our rating on DIS is based on our belief that consensus estimates are too high owing to high near-term investment in direct-to-consumer (DTC) in 2021, and another year of unclear earnings contributions from theme parks, ESPN and film releases as vaccines roll out slowly globally," they say. "We worry that theme parks, cruise ships or cinema attendance may not return to pre-COVID levels during 2021, which current valuations anticipate. We do believe that DIS has a strong enough balance sheet to weather a longer COVID-induced earnings downdraft."
Deutsche Bank analyst Bryan Kraft (Buy) is leery of theme park attendance, too, especially in the wake of spiking case counts of the delta variant.
"COVID cases in Florida are at their highest levels since the new reporting began," Kraft says. "There could be risk of slowing attendance recovery should cases continue climbing in Florida and nationwide as the delta variant spreads. New mask guidance from the Centers for Disease Control and Prevention might also give prospective Parks visitors pause as they consider travel plans."
Overall, the consensus estimate for Walt Disney's fiscal third quarter is for earnings per share (EPS) of 56 cents (+600% YoY) on revenues of $16.8 billion, a 42.4% increase from Q3 2020.
How Much Is Planet Fitness Scaling?
Planet Fitness (PLNT, $75.84) shares sold off following the fitness center chain's first-quarter earnings report in May. Specifically, PLNT stock fell more than 4% after the company reported lower-than-expected earnings and revenue, with CEO Chris Rondeau warning he was anticipating "the operating environment to remain volatile in the near term."
For the company's Q2 results – due out after the Aug. 9 close – analysts, on average, are anticipating Planet Fitness to report earnings of 23 cents per share, compared to a per-share loss of 32 cents in the year-ago period. The consensus estimate for revenues is for $127.2 million, 216% better year-over-year.
Stifel analyst Chris O'Cull is guiding for a slightly slimmer Q2 EPS of 21 cents, though he believes membership levels and new gym openings are likely to have a greater impact on the stock than its bottom line. He recently upgraded PLNT stock to Buy from Hold and lifted his price target by $3 to $85, representing expected upside of 12% over the next 12 months or so.
"Our rating reflects our view that Planet's unit-level returns and scale support the likelihood it will have 4,000 units in North America, or nearly double the current system count, by 2030," O'Cull says. "Despite operating restrictions in 2020 hampering franchisee cash flow, we believe most franchisees have returned to a position of strength and are likely to accelerate unit growth at a faster rate than many expect."
Coinbase's Second Earnings Report: Likely Not as Explosive as the First
Coinbase Global (COIN, $262.83) will report its second earnings report as a publicly traded company after the market closes Tuesday, Aug. 10.
In its first quarter, the cryptocurrency exchange reported earnings per share of $3.05 on $1.8 billion in revenue, with the latter figure up more than 200% from the prior quarter. Part of this was due to a surge in cryptocurrencies, with Bitcoin alone doubling in value over the three-month period.
However, the second quarter was a different story for crypto, with Bitcoin down nearly 41%. As such, the consensus estimate among analysts is for COIN to report earnings of $2.24 per share, down 26.6% from the previous quarter. Revenues are projected to decline roughly 1.7% sequentially to $1.77 billion.
Oppenheimer analyst Owen Lau is upbeat heading into this week's report, expecting COIN to post a record quarter across a number of metrics, including trading volume, revenue, verified users and monthly transacting users (MTUs).
"After adding Dogecoin, Polkadot, and others, COIN should gradually reduce its reliance on Bitcoin," Lau adds. "We continue to see a sharp dislocation between COIN's fundamentals and its valuation and believe the current price offers an attractive entry point for long-term investors." He has an Outperform rating on Coinbase Global, which is the equivalent of a Buy.
Airbnb Expected to Report Smaller Losses
Airbnb (ABNB, $148.54) is another Wall Street newbie that's set to take the stage with its quarterly results this week.
The vacation rental company will report its second-quarter results after the Aug. 12 close, and the pros are looking for a per-share loss of 48 cents. This would mark an improvement over ABNB's first-quarter loss of $1.95 per share. Revenues, meanwhile, are expected to land at $1.2 billion, up 35.3% from the first three months of the year.
"In May, Airbnb reported solid 1Q results," says Scott Devitt, analyst at Stifel. "Recent data suggests the recovery in travel activity has continued to gain momentum in tandem with rising vaccination rates and normalizing consumer behavior."
The analyst, who has a Hold rating on ABNB, is anticipating the company reports second-quarter adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $38 million and gross bookings of $11.8 billion, the latter up 271% on a year-over-year basis.
The vacation rental company went public last December in one of the most highly anticipated initial public offerings (IPOs) of the year. While ABNB stock had a strong start on the charts, it has struggled since tapping its all-time high near $220 in mid-February. The shares are currently clinging to a slim 1.2% year-to-date advance.