Disney's Mint Green and the Seven Dwarfs

You show 'em, Disney (NYSE: DIS  ) . The family entertainment giant smoked Wall Street in its latest quarter. (I use that verb figuratively, given Disney's nonsmoking rules at its theme parks, and now in its movies.) Earnings from continuing operations soared 18% to hit $0.58 per share. The pros were looking for a profit of only $0.55 a share.

Humbling the pros has become a common occurrence since CEO Bob Iger took over two years ago. You could even set your watch by it, assuming that you only need to set your watch once every three months.

EPS

Est.

Q3 2007

$0.58

$0.55

Q2 2007

$0.44

$0.38

Q1 2007

$0.50

$0.39

Q4 2006

$0.36

$0.34

Q3 2006

$0.53

$0.44

Q2 2006

$0.37

$0.31

Q1 2006

$0.35

$0.30

Source: Thomson First Call

The top line inched just 7% higher, but widening operating margins in its stronghold media-networks and theme-park businesses helped fatten the droplets as they rained down to the bottom line.

Take Disney's theme parks. Attendance may have been flat at Disneyland, but it clocked in 4% higher at Disney World. That's better than the dip in turnstile clicks that regional operator Cedar Fair (NYSE: FUN  ) posted earlier this week. Even more impressively, its Disneyland and Disney World resort hotels were operating at occupancy levels of 96% and 93%, respectively.

Compare that to another destination-driven chain like Great Wolf Resorts (Nasdaq: WOLF  ) . We're still a week away from knowing how the leader in indoor waterparks fared over those same three months, but Great Wolf occupancy rates were 65% during last year's second quarter and 59% the year before that.

Disney does not provide guidance, but the near-term outlook should be rosy. High School Musical 2 debuts in two weeks. The Disney Channel phenomenon has helped make the company cool with older kids. The company even has a juggernaut of a partner in Wal-Mart (NYSE: WMT  ) , which is promoting the flick with special-edition soundtrack CDs.

Then we get to the holidays. Disney should have a seasonal spike as Pirates of the Caribbean: At World's End and Ratatouille hit the DVD market in time to become stocking-stuffers. 

The company is doing things right. It has acquired 151 million shares through the first nine months of the fiscal year, yet it still managed to lower its net borrowings balance.    

How much of that is Iger's doing? Obviously, he doesn't deserve all of the credit, but it's starting to seem like more than just a coincidence. Analysts have been dwarfed by Disney's earnings power for seven straight quarters now. You know what Disney does with seven dwarves, don't you? It transforms them into classics.

Disney is an active recommendation for Motley Fool Stock Advisor newsletter subscribers. Wal-Mart is a pick in the Inside Value research service. Cedar Fair is an Income Investor selection. You don't need a single Disney Dollar to try any of the services free for 30 days

Longtime Fool contributor Rick Munarriz can usually be found at Walt Disney World. He's the one wearing the "Bob Iger Fan Club" T-shirt. He owns shares in Disney and units in Cedar Fair. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy is sleepy, happy, bashful, and a bit dopey, but never grumpy.


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