Equities Update: Disney, Glencore, L&G…

Strong box office and streaming fuel Disney earnings growth

Adam Vettese, Market Analyst at investment platform eToro, said: ”Disney beat expectations for third-quarter revenue and earnings, snapping a streak that had seen the company coming in short of revenue expectations for the last four previous quarters in a row.

“CEO Bob Iger’s renewed approach of empowering creatives at the company in an attempt to focus on quality rather than quantity appears to be paying off, with the entertainment segment of the company being a standout performer this quarter. Inside Out 2 proved to be Disney’s biggest-grossing animated film ever and its first $1bn hit at the global box office in more than a year. It also played a part in boosting streaming numbers, with the original Inside Out helping to drive Disney+ sign ups once the trailer for the new movie dropped.

“Last quarter, the company reported a first-time profit for the combination of its Disney+ and Hulu streaming services and projected its streaming business as a whole – in other words also including ESPN+ – would turn a profit in the fourth quarter. They have managed to achieve this combined profitability ahead of their own guidance, doing it for the first time in the third quarter.

“Overall, it’s a robust performance by Disney’s portfolio of business segments, though there are some indications of softness in its Experiences segment. The company warned they had seen a moderation of consumer demand in their domestic businesses towards the end of the quarter that exceeded their previous expectations, which could impact the next few quarters. This could potentially sound alarm bells with investors who are already jumpy about slowing demand amongst US consumers.”

Glencore profits fall but investors see a fossil fuel future

Mark Crouch, Market Analyst at investment platform eToro eToro, says: “Glencore investors will be disappointed with the company’s half year earnings which the Swiss mining giant confirmed have fallen by a third. With so much reliance on commodity prices Glencore’s margins can fluctuate wildly.

“For a company of Glencore’s size, by and large their earnings growth over the long term has been excellent. With global commodity demand expected to increase, management has been proactive in maintaining that trajectory, recently securing deals to expand and improve its LNG and steelmaking coal production facilities.

“And while Glencore slashed their dividend earlier this year to pay down debt and fund acquisitions, investors will see the bigger picture. So much so, shareholders unanimously agreed to retail further coal production units, showing their conviction that fossil fuels remain at the heart of Glencore’s future. 

“The strength of Glencore’s balance sheet means the business can comfortably absorb price volatility. Shareholders will know by now returns on mining investments are sporadic. What matters most however is the long-term trend, which for Glencore, is up.”

L&G modestly beats forecasts

Adam Vettese, Market Analyst at investment platform eToro, said: “Legal & General has inched over the line of beating consensus by 1% in a very steady if not uneventful set of results. They expect growth to continue in the mid-single digits, have increased their dividend and announced a £200m share buyback. Arguably this is exactly the kind of news investors want to hear after the week they have had given the recent global sell-off. 

 “A fall in AUM was offset by a huge uptake in individual annuities. These products pay a fixed income in retirement for life and have proved more attractive in this higher interest rate environment.  

“L&G also noted that macro conditions do represent a risk to their performance and are not immune from any volatility as some recession fears or at least fears of a ‘hard landing’ may have crept in over the last week.The firm’s construction arm has started to see the benefit of supply chain and inflation pressure easing, which should continue as the year goes on.

“Overall shareholders will be looking ahead to how new CEO Antonio Simoes’ overhaul plan develops and if shares can recover some of the ground they have lost so far this year.