Last week’s earnings report from The Walt Disney Company (NYSE:DIS) was a disappointment for investors, despite the company reporting decent profits. We did some analysis and found some comforting facts behind the earnings numbers.
View our latest analysis for Walt Disney
Earnings and Revenue History
How rare items affect profits
To properly understand Walt Disney’s earnings results, we must consider the $3.1 billion charge attributable to extraordinary items. The charge for extraordinary items is disappointing at first, but it also has a silver lining. We have studied thousands of publicly traded companies and found that extraordinary items are often one-time in nature. And that’s not surprising, given that these items are considered unusual. Assuming these extraordinary charges don’t reoccur, and all else being equal, Walt Disney is expected to generate higher earnings next year.
You might be wondering what analysts are forecasting in terms of future profitability, and luckily, you can click here to see an interactive graph depicting future profitability based on analyst forecasts.
Our take on Walt Disney’s earnings performance
Unusual items (expenses) have reduced Walt Disney’s earnings over the past year, but we may see an improvement next year. Because of this, we believe Walt Disney’s earnings power is at least as good as it appears, if not better. Moreover, over the past three years, earnings per share have grown at a highly impressive rate. Ultimately, if you want to properly understand the company, it’s important to consider not only the factors mentioned above, but others as well. If you want to dig deeper into Walt Disney, you should also look at the risks it currently faces. In terms of investment risks, we’ve found that Walt Disney has 1 warning sign . Understanding this should be part of your investment process.
Today we’ve focused on a single data point to better understand the nature of Walt Disney’s profits. But there are plenty of other ways to form an opinion on a company. Some consider a high return on equity to be a good sign of a quality company. While it might take a little research on your part, you may find our free collection of companies boasting high return on equity , or this list of stocks with significant insider ownership, useful.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.