Should Disney Be Getting More Out of This Quarter?

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The Walt Disney Company (NYSE: DIS) released fiscal second quarter financial results after markets closed Tuesday. The Mouse House said that it had $1.95 in earnings per share (EPS) on $14.55 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $1.69 in EPS on $14.08 billion in revenue. The same period from last year had $1.50 in EPS on $13.34 billion in revenue.

In terms of its segments Disney reported:

  • Media Networks revenues for the quarter increased 3% to $6.1 billion and segment operating income decreased 6% to $2.1 billion.
  • Broadcasting revenues and segment operating income for the quarter were essentially flat at $1.9 billion and $343 million, respectively. Higher affiliate revenue due to contractual rate increases was offset by a decline in advertising revenue, lower income from program sales and higher network programming and marketing costs.
  • Parks and Resorts revenues for the quarter increased 13% to $4.9 billion and segment operating income increased 27% to $1.0 billion. Operating income growth for the quarter was due to increases at our domestic and international parks and resorts.
  • Studio Entertainment revenues for the quarter increased 21% to $2.5 billion and segment operating income increased 29% to $847 million. Operating income growth was due to increases in theatrical, home entertainment and TV/SVOD distribution results, partially offset by higher film cost impairments.
  • Consumer Products & Interactive Media revenues increased 2% to $1.1 billion and segment operating income decreased 4% to $354 million as higher income from licensing activities was more than offset by a decrease in comparable retail store sales and an unfavorable foreign currency impact.

Disney did not offer any guidance for the second quarter, although there are consensus estimates calling for $1.96 in EPS on $15.3 billion in revenue.

On the books, cash and cash equivalents totaled $4.2 billion at the end of the quarter, versus $4.0 billion at the end of the previous fiscal year.

Robert A. Iger, Chairman and CEO, commented:

Driven by strong results in our parks and resorts and studio businesses, our Q2 performance reflects our continued ability to drive significant shareholder value. Our ability to create extraordinary content like Black Panther and Avengers: Infinity War and leverage it across all business units, the unique value proposition we’re creating for consumers with our DTC platforms, and our recent reorganization strengthen our confidence that we are very well positioned for future growth.

Shares of Disney closed Tuesday at $101.76, with a consensus analyst price target of $119.90 and a 52-week range of $96.20 to $113.19. Following the announcement, the stock was initially flat at $102.12 in the after-hours session.

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