After a year and change when theme parks did all the heavy lifting on the revenue-growth front, we're finally getting some diversity in growth at Walt Disney (DIS 3.30%). The blowout financial results that the media giant posted after Tuesday's market close were truly a team effort.
All four of Disney's segments posted year-over-year top-line growth in the fiscal second quarter, which ended March 31: Media networks revenue increased 3%, parks and resorts grew 13%, studio entertainment grew 21%, and consumer products tacked on 2%. All told, revenue grew by 9% to hit $14.55 billion, the media giant's headiest quarterly gain in more than two years. Analysts had only been forecasting 6% growth. The parks and studio segments were the only ones to deliver operating income growth, but adjusted earnings per share still rose 23% to $1.84, which also landed comfortably ahead of the pros perched at $1.69.
It's a small world after all
Those results were a far cry from fiscal 2017, when Disney's theme parks division was the only segment to grow its revenue and segment operating income. Things started to improve in 2018's holiday-backed fiscal first quarter, but back out its theme parks and we would've been treated to another period of declining revenue and segment operating income. There's no need to whip out a calculator to see if that would be the case this time around.
One didn't have to go out on a limb to predict that Disney's theme parks would have a strong showing. The timing of Easter -- which, because it fell in late March rather than April as it did last year, slid into 2018's fiscal Q2 -- was certain to spur extra turnstile clicks, as many school districts time their breaks to coincide with the holiday. If that wasn't enough of a giveaway, all four of the theme park and amusement park companies that had reported ahead of Disney this earnings season had come through with double-digit percentage revenue growth. The 13% top-line growth the Disney parks produced actually made them the laggard of the lot.
The biggest percentage gain came from Disney's studio, and while that is not a surprise given the blockbuster success of Black Panther, it's worth pointing out that Avengers: Infinity War didn't hit theaters until after Q2 came to a close.
Media networks remains Disney's largest segment, and things may not be as dire there as the narrative of the past couple of years would have you believe. Disney cable networks came through with a 5% increase in revenue, and problem child ESPN was able to grow its affiliate and ad revenue despite serving fewer customers and producing fewer impressions.
The current quarter will have its challenges, primarily for Disney's theme park unit, which will face a hard comparison to 2017 due to the shift the Easter holiday, as well as the late-in-quarter debut of Toy Story Land at its Hollywood Studios park in Florida, which contrasts to the May 2017 opening of Pandora -- The World of Avatar at Animal Kingdonm. However, given that a strong quarter appears to be in the works for Disney's studio segment, and that its media networks are fading slower than many bears had predicted, this could finally be the time that Disney stock stays above $100.