Club holding Walt Disney (DIS) is scheduled to report its fiscal third quarter financial earnings after the bell on Wednesday. Ahead of the release, we want to provide Club members with an overview of important factors we’ll be looking out for in the report and during management’s conference call with investors. Disney’s third-quarter results will also help us determine how to position our DIS holding in the Charitable Trust moving forward, as the stock has tumbled about 30% this year, underperforming the broader market despite rallying in recent weeks. Wall Street is expecting the following from Disney’s earnings, according to estimates from FactSet: Earnings per share: $0.98 Revenue: $21 billion Despite missing estimates on headline revenue and earnings in its second quarter, Disney beat expectations in Disney+ subscriber growth and its theme park segment. Here’s a breakdown of what to keep top of mind for Disney’s third-quarter earnings. Parks, experiences and products Disney’s parks, experiences and products segment, which includes its theme parks business, has had a great recovery since the height of the pandemic. Last quarter, this segment delivered $6.7 billion in revenue, a more-than-double increase from the prior year’s quarter of $3.2 billion. That growth was driven by increased attendance in domestic parks and higher guest spending, among other things. Strong demand for U.S. parks offset lower attendance in international parks and resorts last quarter. We will be looking for continued momentum in the parks business given last quarter’s upbeat results. During Disney’s second-quarter earnings webcast, executives maintained that this segment is expected to remain strong as appetite for travel is still strong and consumer demand for parks remains resilient. “We feel really good about the consumer demand and what we’re seeing in the forward-looking bookings and everything else in the attendance levels,” said Christine McCarthy the company’s CFO during the webcast. But we also don’t want to discount the macro challenges, since Disney is not resistant to inflation. Just like many other multinational companies, Disney faces pressure from rising costs, which have been fueling global recession fears this earnings season. Disney’s management is aware of inflationary pressures across different areas of its business and has taken steps to relief any pressure on profit margins. This includes its fuel hedging program to mitigate higher fuel costs and diversifying its suppliers to manage supply chain disruptions. Disney is a strong competitor in the streaming wars Streaming is a saturated environment, but we see Disney as a strong competitor in this space. A key metric that’s reviewed for all players in the streaming wars is subscriber growth. In its most recent earnings report in May, Disney reported stronger-than-estimated Disney+ subscriptions, which rose to 137.7 million as of the company’s second quarter, while Netflix (NFLX) reported a subscriber loss in its last quarter. This growth could put Disney on track for reaching its goal of 230 to 260 million Disney+ subscribers by fiscal 2024, which is also when management expects Disney+ to reach profitability. During Disney’s second-quarter earnings call, McCarthy signaled a slowdown in the rate of subscriber growth which we think investors may have misinterpreted as a downward guide. To be clear, McCarthy noted that while it’s anticipated there will be more subscribers in the second half of the year compared to the first, the growth may not be as strong as previously expected because subscriber growth for the first half was so strong. While there’s no doubt that Netflix is a top contender in the streaming wars, Disney has a much more diversified business — ESPN, theme parks, cruises and consumer products — than Netflix. Moreover, Disney has a smaller but growing streaming business. This means there is much more room for Disney+ to grow. Don’t forget, Disney’s content strategy is unique, given their ability to keep monetizing off their famous characters. Netflix does not have this competitive advantage. Back in June, Disney lost the streaming rights to India Premier League’s (IPL) cricket matches to Viacom18 while retaining the TV rights. This is important because Disney+ Hotstar, which is the streaming service’s Indian brand, has accumulated more than 50 million subscribers as of the second quarter, accounting for a large portion of Disney’s streaming business. That said, we’ll be looking to see if subscriber guidance will be impacted as a result of losing IPL streaming rights and how Disney plans to compete in sports media rights. A bright spot for Disney’s profitability in streaming will be the addition of an ad-supported subscription service — something that Netflix doesn’t have yet — which is expected to roll out by the end of the year in the U.S. and internationally by 2023. Disney also has Hulu under its belt, a streaming service that already supports ads. This service will allow Disney+ to expand its offerings at a cheaper price, which could help boost subscriber growth. What we like about Disney is its ability to raise prices in an inflationary environment. Last month, Disney’s ESPN+ raised the price of its subscription service from $6.99 per month to $9.99 per month to boost profitability. In a slowing economy one of the first expenses businesses cut is advertising. As a result of rising prices, we will be watching to what extent Disney’s advertising revenue growth has been impacted over the quarter. Since advertising is a cyclical business that depends on how the economy performs, analysts are trimming their estimates on Disney’s advertising growth. This is not unique to Disney; advertising revenue is expected to slow across media companies. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. 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