I guess Pixar (NASDAQ:PIXR) is back to being Pixar. After stumbling in the June quarter, breaking an enviable streak of market-thumping reports, the animation giant is zooming past Wall Street's model munchers again. The company behind theatrical classics like Toy Story and Finding Nemo earned $0.22 a share on $45.8 million in revenues.
The results left analysts asleep at the wheel, expecting earnings of just $0.11 a share on a mere $30.6 million in revenues. It's not as if there were even one sharp bean-counter who came close to approaching Pixar's eventual reality; the most ambitious targets had the company earning just $0.13 a share on a top line of $35 million.
Yes, except for the disappointing second quarter this year, which found Pixar talking guidance down from $0.15 a share to a dime, last night's showing is pretty much what Pixar has done in recent years. It's why the company has been such a rewarding selection in the Motley Fool Stock Advisor premium research newsletter.
Some financial journalists were talking down shares of Pixar on the heels of a relatively healthy opening weekend for Disney's (NYSE:DIS) computer-rendered Chicken Little. The thinking being that an in-house hit from Disney will make it less reliant on its partnership with Pixar. It would also make Disney a stronger competitor for Pixar when the two companies wrap up their contractual agreement with June's release of Cars.
The first point is hogwash. Yes, Chicken Little's $40.1 million take over the weekend is a great start, but it's nowhere near as dominating as the $70.1 million that Pixar's The Incredibles took in during the exact same weekend slot last year. Chicken Little is likely to take in between $100 million to $120 million in its domestic theatrical run. It may duplicate that overseas. That falls well short of Pixar's global average of $533 million grossed on each of its six full-length features. So, no, Disney on its own is still nowhere near Pixar's league. It's a noble effort, though.
The second point, with Disney becoming a stronger competitor, at least has some validity to it. Pixar already has to worry about fellow Stock Advisor pick DreamWorks Animation (NYSE:DWA) and its ambitious release slate. Other studios are also getting in on the computer-rendered act. That's why Disney and Pixar may still wind up as partners, with Pixar keeping all of the profits on its self-financed flicks but retaining Disney as a distribution partner at a competitive rate.
With more than $1 billion in cash -- or $8.48 a share -- Pixar has the financial wherewithal to finance its own projects. It may also find a more willing film distributor than Disney. However, if both companies are going to be powerhouses in theatrical animation, it certainly wouldn't hurt to have them work together to make sure that they space out their releases without one cramping the other studio. DreamWorks is already doing just that.
So do the right thing, Pixar. Then again, going by last night's report, I'm guessing that's not the only thing you know how to do right.
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Longtime Fool contributor Rick Munarriz owns all of the Pixar releases on DVD. Yes, he owns shares of Pixar too -- and Disney. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
