DIS - Disney: Q1 2024 Earnings Revealed Improved Profitability And Streaming Success

2024-02-22 11:52:20 ET

Summary

• Q1 earnings showed improved profitability and earnings, with a 49% increase in EPS, the return of share buybacks and a 50% dividend increase.
• Management acknowledged recent missteps and promised improved content production in the future.
• Despite the rally, shares are still trading at a 14% undervaluation, making Disney a real GARP opportunity.
• The firm still faces risks from the standoff with Ron DeSantis and potential for failed execution of content releases.
• Buy rating issued.

Investment Thesis

The Walt Disney Company ( DIS ) produced what I view as solid Q1 earnings data with an improvement in their operating efficiency and streaming successes resulting in improved profitability and net income for the firm.

A massive 49% increase in EPS, the return of share buybacks along with a 50% bump in the firm's dividend shows how confident management is about 2024 being a solid year for the entertainment giant in my view.

These quantitative improvements were accompanied by a refreshingly accountable attitude by the management team for recent missteps along with the promise of improved content production in the future.

Current valuations have seen a solid rally since late 2023 which has left shares trading at around a 14% undervaluation given a base case....

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