Disney's Revenue Is Recovering. Is Its Stock Next?

The Motley Fool
The Motley Fool

In this clip from "3 Minute Stocks Updates" on Motley Fool Live , recorded on Jan. 5 , Motley Fool contributor Toby Bordelon discusses how Disney (NYSE:DIS) is slowly but surely recovering with theme parks being back open and cutting-edge technology emerging from the company.

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Toby Bordelon: Disney, big entertainment company, big giant company, everyone's familiar with them. We covered earnings in Q4 which they released I believe it was in October or November, which is the end of their fiscal year. Their fiscal year ends right before the end of the year. There was some concern with those but it looked decent, I think. Revenue came in at $18.5 billion that's up 26% year-over-year. Net income was $290 million. The key thing there, it was positive net income versus a loss of $580 million the year before. You can imagine, as we all know during the pandemic, Disney suffered a lot with theaters being closed, with theme parks being closed. It was a rough year for them so it's nice to see them back on track now with that positive net income. Full year revenue, $67.4 billion, which was up 3%. They're getting to that recovery stage, I think. Operating cash flow was $2.5 billion, up 58%. That's nice. We're starting to see that cash flow come back again. Then return to them being that major cash-flow machine that they are. The big news, guys, the big news for Disney in this past fiscal year was theme parks being back. That revenue year-over-year was up 99%. A pretty easy comp when you really think about it given the parks were closed much of 2020. But still that's nice to see almost $5.5 billion of the theme park division that year. They're getting there. That was the quarter. For the full year, parks revenue was down about 3%, $16.5 billion. They're still recovering but they're almost there. They're getting back on track. Parks are open pretty much everywhere. We're seeing prices being fairly robust. We're seeing them roll out new products like this new Genie+ system to replace the old fast pass system. A lot of good things happening. Demand is pretty high there. We're also seeing movies operating again. "Spider-Man." You guys see "Spider-Man: No Way Home?" Massive blockbuster. Great at the box office. Biggest box office since the pandemic. Really good to see that. Disney+. I think the weak spot has been the growth of Disney+ subscribers. At the end of quarter had 118 million, they expected 125, so not quite as much as they thought but still doing pretty well. And news now. I just want to throw this out here. This happened this week. Disney had to file a patent. They were granted a patent on December 28 that allows people to experience a virtual 3D world without any glasses, no headsets, no electronic devices. We're thinking a lot of talk about the metaverse. That's big news. And if you've been to a theme park you know there's already stuff like that with these immersive experiences but this is a little bit different. They're using a bunch of cameras. They call this a virtual world simulator, a bunch of projectors. The idea is to create this full experience with nothing you have to wear. Two things I love about that are that theme parks were an obvious case for AR and VR technology because people are already trying to immerse themselves in this world. But the second thing I love about that is an impediment to this technologically really taking off is the expensive equipment. Disney's going around that. They're saying we can do that. We can create this without this expensive equipment and I think that's great. And I think my guess is if you look out this year, maybe next year, you're going to see AR really going to theme parks in a big way and people making use of this technology. It's nice to see Disney on the cutting edge of that. Hopefully, get to a theme park soon, guys, you might see some exciting stuff.

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Toby Bordelon owns Walt Disney. The Motley Fool owns and recommends Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy .

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