Walt Disney (DIS 0.86%) will release its quarterly report on Wednesday, and investors still have high expectations that the multimedia empire can sustain its impressive growth rates well into the future. With its smart acquisitions of content-production powerhouses Lucasfilm, Marvel, and Pixar and with an ironclad grip over the sports-programming world with its leading ESPN network, Disney has held competitors at bay and has become a must-have source of content both for cable providers and for streaming-video giants Netflix (NFLX 0.65%) and Amazon.com (AMZN -0.01%), and shareholders expect earnings growth to continue well into the future.

When it comes to vertical integration in entertainment, Disney has mastered the industry. With so many cross-promotional opportunities, Disney builds its customer base from the earliest of ages and holds onto them throughout their lives. Yet the stock rose at more than double the pace of the Dow Jones Industrials last year, raising questions about whether even such a promising company might be overvalued. Let's take an early look at what's been happening with Walt Disney over the past quarter and what we're likely to see in its report.

Source: Wikimedia Commons.

Stats on Walt Disney

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$12.23 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Disney earnings keep moving higher and higher?
Analysts have had mixed views on Disney earnings in recent months, boosting their December-quarter and full-year fiscal 2014 estimates by $0.02 per share each, but cutting their out-year fiscal 2015 projections by a nickel per share. The stock has continued its advance, rising 5% since late October.

Disney's September-quarter earnings report provided a good picture of just how broad-based and strong the company's empire remains. Sales rose 7%, pulling net income up by 12%, and the company's parks and resorts segment led the way with above-average gains in revenue and earnings. Theme-park ticket-price increases and merchandise and hotel room revenue helped offset an 8% drop in operating income from Disney's media-networks segment. Disney also said it would delay the release of the next installment of the Star Wars series from mid-2015 to late 2015, but that didn't creating any lasting drag on the stock.

Looking forward, one key deal involving Disney and Netflix could hold the key to yet another huge revenue stream for both companies. CEO Bob Iger said in November that the two companies would create a partnership to build several live-action series concepts based on Marvel characters. With so much potential content in the Marvel universe, Disney can afford to produce shows based on lesser-known characters without fear of cannibalizing demand from its feature film series on more popular characters. Moreover, with Netflix trying to hold Amazon at bay, Disney has leverage to get even more money for exclusive content deals and other value-added arrangements.

Disney doesn't have a wide-open field for industry domination, though. New pushes from NBC Universal and Fox to create rival sports networks of their own have caused some to worry about whether ESPN's command of the sports-broadcasting industry is a wide enough moat to last indefinitely. But with such a huge first-mover advantage, Disney has a head start that will make it difficult for its rivals to compete effectively unless they're able to build up their own critical mass of interest.

Moreover, Disney has some industries where it hasn't created a huge leadership advantage. In interactive gaming, for instance, Disney has seen repeated losses for years, and reports earlier today said that the company will lay off hundreds of employees at the division. Even so, interactive entertainment will remain an important piece of the industry, and Disney won't want to jettison its unit entirely if it can salvage profitable parts of it.

In the Disney earnings report, look beyond results of blockbuster films like Frozen to get a vision of the company's long-term growth strategy. With so many drivers to boost sales, Disney needs to be smart about choosing the path that will lead to the best possible prospects in the years and decades to come.

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