1Q26 Earnings Updates: Part Two – DIS, NXST, SONY, WMT, HD
Walt Disney (DIS): DIS delivered another solid quarter, with continued strength across its streaming and experiences businesses helping offset ongoing pressure in traditional television. Direct-to-consumer profitability continued improving, while Parks results remained resilient despite a somewhat softer consumer backdrop. Management also maintained a constructive tone around upcoming content releases and long-term engagement trends.
Investor focus continues to center on whether DIS can sustain the recent improvement in earnings consistency after several years of operational restructuring and strategic repositioning. Streaming profitability has improved meaningfully, but investors still want clearer evidence that DIS can consistently balance content investment, margin expansion, and long-term subscriber engagement while traditional linear networks continue to decline.
For Northlake, the broader thesis remains intact. DIS increasingly looks like a more focused and financially disciplined company, with improving visibility across streaming, parks, and studio operations. While the stock has recovered from prior lows, valuation still appears reasonable relative to long-term earnings power if management can continue producing more consistent execution. We continue to see attractive long-term upside as investors gain confidence that the company is entering a more stable period of earnings growth.
Nexstar Media Group (NXST): NXST delivered another solid quarter, with modest upside to revenue, EBITDA, and free cash flow. Investor focus was less on the quarter itself and more on management’s latest comments surrounding the ongoing Tegna litigation process. Political advertising remained strong, while core advertising softened somewhat as the quarter progressed amid weaker consumer confidence and rising geopolitical concerns.
CEO Perry Sook expressed confidence in a favorable Tegna outcome but declined to comment on possible settlements with state attorneys general that continue to block full integration. Importantly, management emphasized that Nexstar still has access to Tegna’s cash flow for deleveraging and can pursue productive arm’s-length transactions, particularly in digital advertising. Combined 2026 guidance for standalone Nexstar and Tegna came in slightly ahead of expectations despite softer core advertising trends.
The investor debate centers on how the Tegna litigation resolves and how much of the original acquisition accretion NXST can preserve. Our view remains positive. Greater clarity around the process, particularly access to Tegna’s free cash flow, is encouraging. Even at a still materially accretive $40 in free cash flow per share, well below the original expectation of more than $50, NXST trades near a 20% free cash flow yield. As litigation uncertainty clears, a move toward a 15% yield could support shares near $250, or roughly 25% upside.
Sony Group (SONY): SONY delivered another strong quarter, supported by continued momentum across film and TV production and video games. Results came in ahead of expectations, while management also raised full-year guidance modestly despite a still uncertain consumer and currency backdrop. Gaming engagement trends remained healthy, and the company continues benefiting from the diversification of its entertainment portfolio.
Investors continue to focus on whether SONY can sustain the recent improvement in profitability and cash generation while navigating a more mature PlayStation cycle and uneven global consumer demand. Questions also remain around the long-term earnings power of the gaming business as hardware demand normalizes and software mix becomes increasingly important.
For Northlake, SONY continues to stand out as a high-quality global media and entertainment company with multiple long-term growth drivers. The stock has rallied roughly 10% recently, but we still see additional upside potential as investors continue gaining confidence in the durability of earnings growth across gaming, music, film, and content licensing. While near-term currency and consumer trends could create periodic volatility, the broader strategic positioning of the company remains attractive.
Walmart Inc. (WMT): WMT delivered another steady quarter, though the market continues to focus more on macro headwinds than operating execution. Revenue, comparable sales, transactions, and EPS were all largely in line with expectations, while higher-growth businesses including eCommerce, advertising, and membership continued growing at roughly 20%. Market share gains also remained broad-based across income tiers, reinforcing Walmart’s positioning in a tougher consumer environment.
Management maintained a confident tone despite increasing pressure on lower-income consumers from higher fuel prices. Full-year guidance was unchanged and still implies operating income acceleration beginning in the second quarter, though both quarterly and full-year expectations remain modestly below Street forecasts. WMT also reiterated its willingness to continue investing in price, even if that creates near-term margin pressure. The investor debate increasingly centers on how much consumer spending slows from here and whether the stock’s premium valuation leaves room for additional upside.
Our long-term view remains unchanged, though near-term pressure on the shares could persist until sentiment around the U.S. consumer improves. WMT continues to offer a compelling combination of market share gains, eCommerce growth, and operational consistency. Still, at roughly 45x earnings, the stock leaves little room for disappointment, particularly if consensus EPS expectations near $2.92 prove too optimistic. As macro pressures eventually ease, we continue to see a path toward sustained double-digit EPS growth and upside toward $150 over time.
Home Depot (HD): Home Depot’s first-quarter results reinforced a familiar theme: the business remains stable, but a meaningful housing-driven recovery still has not arrived. Revenue, comparable sales, and adjusted EPS all came in modestly ahead of expectations, while management reaffirmed full-year guidance across sales, margins, and earnings.
Consumer demand also remained largely unchanged from recent quarters. Smaller repair and maintenance projects continued to hold up relatively well, while larger discretionary remodel activity remained soft as elevated mortgage rates and weak housing turnover continue to pressure financing-sensitive projects. Management again described demand trends as stable rather than improving materially.
The Pro business remained one of the more constructive parts of the story. Management continued highlighting resilient Pro demand and the long-term strategic value of SRS and GMS, though analysts remained focused on whether those businesses create near-term margin pressure before the housing cycle improves.
The broader investor debate therefore remains centered on timing. Investors continue waiting for clearer evidence that larger project demand is beginning to recover and that operating leverage can improve meaningfully from current levels. While the reaffirmed guidance likely reduces near-term downside risk, management’s tone remained cautious and still pointed toward gradual normalization rather than a sharp rebound.
For Northlake, HD remains a high-quality franchise executing well through a difficult housing environment. At roughly 20x expected earnings, the stock appears attractive for a company with Home Depot’s market position and long-term growth potential. However, the shares likely need stronger transaction growth and a broader recovery in larger discretionary projects before valuation can return toward a more meaningful historical premium. We continue to see attractive long-term upside potential above $400, though improvement in the broader housing backdrop may still take time.
Northlake Capital Management, LLC is a state-registered investment adviser. Registration does not imply a certain level of skill or training. Additional information about Northlake, including current registration status, is available through the SEC’s Investment Adviser Public Disclosure website. This material is for informational purposes only and is not investment advice or a recommendation to buy or sell any security. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results. Northlake, its employees, and clients may hold positions in securities referenced. Opinions are as of the publication date and are subject to change without notice.
