Walt Disney Co. (DIS +1.98%) is slated to report its fiscal fourth-quarter 2018 financial results after the market close on Thursday, Nov. 8.
After a challenging fiscal 2017, the entertainment giant has gotten its mojo back this year. Last quarter, revenue increased 7% year over year, GAAP earnings per share soared 29%, and EPS adjusted for one-time factors jumped 18%. And for the first nine months of the fiscal year, revenue also increased 7% year over year, GAAP EPS rocketed 50%, and adjusted EPS surged 21%.
The market has rewarded the company's financial performance, propelling Disney stock to a 17.8% return over the one-year period through Nov. 6. The S&P 500 has returned 8.4% over this period.
Here's what to watch and expect in Disney's report on Thursday.
Image source: Getty Images.
The headline numbers
Here are the year-ago period's results to use as benchmarks:
|
Metric |
Q4 2017 Result |
|---|---|
|
Revenue |
$12.78 billion |
|
Adjusted earnings per share |
$1.07 |
Data source: Disney.
Disney doesn't provide guidance. For some context -- though long-term investors shouldn't place too much importance on Wall Street's short-term estimates -- analysts expect the House of Mouse will earn $1.33 per share on revenue of $13.72 billion, representing growth of 24.3% and 7.4% year over year, respectively.
Media networks: Streaming services and acquisition updates
Investors can probably expect more of the same dynamic that's been playing out for much of the last three years in the company's largest segment: Cable operating income falling and dragging down operating income for the media networks segment overall. In the first nine months of fiscal 2018, media networks' revenue edged up 3%, while operating income dropped 6%, driven by a 4% decline in cable's operating income. The decrease in cable's profits is being driven by consumers increasingly favoring video streaming products over cable TV.
The company has been positioning itself to be a winner in the video streaming space. Investors should expect an update on the earnings call on demand for ESPN+, Disney's first direct-to-consumer, subscription streaming service, which launched in April. Management might also comment on the company's plans to roll out its broader streaming offering, scheduled for late 2019.
Last but not least, look for CEO Bob Iger to at least briefly comment on the company's pending massive acquisition of Twenty-First Century Fox's entertainment assets.
Parks and resorts: The horse never to bet against
So far this fiscal year, the parks segment -- the second-largest segment by revenue and operating income behind media networks -- has been the company's star business, just as it was last year. For the first nine months of the year, its revenue increased 11% and operating income jumped 20% year over year.
The good news for investors is that the year-ago comparables, while solid, weren't particularly strong, because results were negatively impacted by Hurricane Irma. In the fourth quarter of fiscal 2017, revenue and operating income increased 6% and 7% year over year, respectively.
Studio entertainment: A light release lineup but a light comparable, too
Disney's fiscal fourth quarter is a traditionally slow time for movie releases since it falls between two busy quarters for film openings. This quarter was no different, as the company released just two movies, neither of which killed it at the box office: Ant-Man and the Wasp and Christoper Robin, released in July and August, respectively. The studio business also likely benefited from some carryover from The Incredible 2, released about two weeks before the start of the fiscal fourth quarter.
That said, the year-ago comparable was also light. Disney released Cars 3 in mid-June, or about two weeks before the start of the year-ago quarter. The film did not do as well as expected with moviegoers.
For some context, in the first nine months of the fiscal year, the segment's revenue and operating income rose 13% and 12% year over year, respectively. However, its operating performance has been stronger than suggested by that 12% result. Last quarter, operating income was negatively impacted by about $100 million in film impairment charges related to two unreleased movies.
