Please ensure Javascript is enabled for purposes of website accessibility

Disney Delivers a Solid Earnings Beat on Strong Parks Business

By Danny Vena - May 8, 2019 at 5:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The entertainment powerhouse reported $14.92 billion in revenue for the quarter and earnings per share of $1.61.

Multimedia giant Walt Disney (DIS 3.69%) delivered fiscal second-quarter results after the market close Wednesday that exceeded expectations, partly on the strength of its theme parks. The stock gained about 1% in after-hours trading on the news.

Fresh off the completion of its acquisition of Fox entertainment assets, Disney reported revenue of $14.92 billion, up 3% year over year, easily topping analysts' consensus estimates of $14.39 billion. Profits were also better than expected, with adjusted EPS of $1.61, down 13% but ahead of the $1.59 anticipated by analysts. 

Disney's Pixar Pier at Night, June 2018

Disneyland's Pixar Pier at Night. Image source: Author.

Strong results in spite of tough comps

Results across Disney's recently revamped operating segments varied. Revenue from the media networks was essentially flat at $5.5 billion. The parks, experiences, and products segment increased 5% year over year to $6.2 billion, with growth at Disney's theme parks responsible for the gains. Both higher attendance and increased spending drove the results. This is even more impressive considering the quarter was hurt by the Easter holiday, which fell in the third quarter this year, compared with the second quarter last year.

The studio entertainment segment appeared to show disappointing results, declining 15% versus the prior-year quarter to $2.1 billion, but that requires context. Last year, Black Panther and Star Wars: The Last Jedi continued to dominate theaters, while in the current-year quarter, Captain Marvel got no help from a comparable Star Wars title.

The recently introduced direct-to-consumer and international segment saw revenue increase 15% year over year to $955 million. Disney noted that due to acquiring a controlling interest in Hulu with the closing of the Fox acquisition, 100% of the streaming company's operating results for the final 10 days of March are folded into its financial results.

Investing heavily for the future

The direct-to-consumer segment also caused the biggest drag on the bottom line as Disney continues to invest heavily in ESPN+ (which launched this time last year) and the upcoming debut of Disney+. It also reported higher losses at Hulu.

CEO Bob Iger was eager to point out the recent success of Marvel's latest blockbuster. "We're very pleased with our Q2 results and thrilled with the record-breaking success of Avengers: Endgame, which is now the second-highest grossing film of all time and will stream exclusively on Disney+ starting Dec. 11," he said. The movie opened in theaters April 26, so the results won't be reflected in earnings until next quarter. 

Disney continues the massive integration of businesses acquired from Twenty-First Century Fox, while laying plans for the debut of Disney+ in November. There's a lot going on under the hood, but it's an exciting time to be a Disney investor.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$97.78 (3.69%) $3.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.