Disney's
The family entertainment leader closed out its fiscal second quarter in good shape, with earnings up 19% to $0.37 a share. Analysts were expecting earnings growth to come in flat at $0.31 a share. This marks the fourth consecutive quarter in which the media giant crushed estimates by a double-digit percentage margin. Free cash flow more than doubled to $1.3 billion, despite a mere 3% uptick in revenue.
As in previous quarters, strength in the company's flagship networks (up 18%) and theme parks (up 7%) comfortably offset weakness in studio entertainment (down 22%) and consumer products (down 3%). Operating margins improved in the leading segments while declining in the holdouts.
It's a fair trade if you're Disney, given the significance of ABC, ESPN, and its global chain of amusement park resorts. During the conference call, Disney soothed analysts by proclaiming that higher prices at the pump won't get in the way of theme-park attendance. That seems to defy the notion that gas prices will impact family travel this summer. Even Six Flags
Now that Disney has completed its purchase of Pixar, the company is expecting the transaction to be dilutive to the tune of $0.10 a share in the second half of the fiscal year. That shouldn't keep Disney from achieving double-digit earnings per share growth this year.
Whether it's selling more than a million copies of its Kingdom Hearts II video game, drawing 1.5 million guests to its once-languishing Animal Kingdom park to conquer the new Expedition Everest roller coaster, or recasting the popular High School Musical TV movie with Latin American and Indian casts for global markets, Disney's on a roll. Clearly, Wall Street hasn't gotten wind of that, since it keeps coming up short in its recent estimates of Disney's bottom line.
That's great news for Motley Fool Stock Advisor newsletter service subscribers. The newsletter is inheriting a Disney recommendation at an attractive price of $14.74 per share, after David Gardner recommended Pixar in the summer of 2003. Pixar will serve Disney well; next month, the House of Mouse will finally be able to enjoy 100% of the profits from a Pixar flick with the release of Cars. A stronger-than-expected showing there may help erode the expected near-term dilution of swallowing Pixar.
Either way, like Cars' computer-rendered stars, Disney seems increasingly built for speed.
Longtime Fool contributor Rick Munarriz is still a kid at heart, smitten with the right kind of animation. He owns shares in Disney. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.