Disney Reports Monday With Streaming, Parks in Focus
Fiscal Q1 2026 results due before the bell. Street expects $1.57 EPS on $24.5B revenue as profitability push continues.
Disney releases fiscal Q1 2026 earnings Monday morning, kicking off a week packed with S&P 500 earnings reports.
The House of Mouse enters this quarter with momentum. The streaming turnaround that management promised has materialized. Parks continue delivering record results. Linear TV remains the drag, but everyone knew that was coming.
Wall Street expects earnings per share of $1.57 on revenue of approximately $24.5 billion. That EPS figure represents a 10.8% decline from the same quarter last year—but don't read too much into the year-over-year comparison. Disney's fiscal Q1 2025 included several one-time benefits that inflated the base.
The Streaming Story
Disney's direct-to-consumer business has transformed from a money pit into a profit center.
The combined streaming operation—Disney+, Hulu, and ESPN+—swung to profitability in 2025 and has now strung together multiple profitable quarters. Operating income for streaming reached $1.3 billion in fiscal 2025, a staggering reversal from the $4 billion loss posted just three years earlier.
The path forward looks solid. Management guided for a 10% operating margin at Disney+ and Hulu for fiscal 2026, with double-digit segment operating income growth "weighted to the second half of the year."
What traders want to hear Monday: subscriber trends, churn rates, and advertising revenue growth. Disney+ had 154 million paid subscribers as of the fiscal Q4 report. Any acceleration would be bullish.
Parks Under Pressure
The Experiences segment—parks, cruises, and consumer products—has been Disney's most reliable profit engine. Record operating income of $10 billion in fiscal 2025 demonstrated the pricing power of Disney's theme park franchises.
But competition is intensifying. Universal's Epic Universe opened in Orlando last year and has been pulling traffic. Disney responded with price increases and new attractions, but the competitive dynamics have shifted.
Management expects high single-digit operating income growth for parks in fiscal 2026. That's decent but not exceptional. Any downward revision would weigh on the stock, given how much investors rely on parks profitability to offset entertainment volatility.
The ESPN Question
ESPN remains the most valuable asset Disney owns—and potentially the most undervalued.
The company is preparing to launch ESPN as a standalone streaming service later this year. That's a major strategic bet. ESPN generates billions in affiliate fees from cable bundles. Shifting to streaming risks cannibalizing that revenue while building a direct-to-consumer business from scratch.
Disney guided for low single-digit operating income growth at ESPN this year, reflecting "timing of rights expenses." The NBA deal signed in 2025 is expensive. Whether ESPN can monetize streaming effectively will determine if the investment pays off.
Valuation and Positioning
Disney shares have rallied off their 2024 lows but remain well below the pandemic-era peak near $200. The stock trades around 18x forward earnings—reasonable for a company with Disney's asset quality but not cheap given the execution risks.
The bull case: streaming profitability proves durable, parks maintain pricing power, and ESPN streaming exceeds expectations. Each of those outcomes would justify multiple expansion.
The bear case: parks traffic softens as Universal gains share, streaming growth decelerates, and ESPN's transition proves bumpier than expected. That combination would pressure both earnings and the multiple.
What to Watch Monday
Key metrics to monitor when Disney reports before the open:
- Disney+ subscriber count — growth or churn
- Direct-to-consumer operating margin — progress toward the 10% target
- Experiences segment operating income — any signs of parks weakness
- ESPN commentary — timing and details on standalone streaming launch
- Share repurchase update — Disney doubled its buyback target to $7 billion for fiscal 2026
The broader earnings season has been solid so far, with 75% of S&P 500 companies beating estimates. Disney needs to deliver to keep the momentum going.
Management's tone on the call may matter as much as the numbers. CEO Bob Iger has guided for double-digit EPS growth in both fiscal 2026 and 2027. Reaffirming that outlook would reassure investors that the transformation remains on track.