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Walt Disney Co. Will Have Plenty to Prove on May 5

By Rick Munarriz - May 3, 2015 at 6:29AM

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The family entertainment giant gears up for a meaty quarterly report.

Source: author.

Walt Disney (DIS -0.95%) seems as if it can do no wrong these days. The family entertainment giant is firing on all cylinders, and the stock just hit an all-time high a few days ago. 

It's against this backdrop that Disney will be reporting quarterly results after Tuesday's market close and -- with my apology to die-hard Star Wars fans -- the force won't be strong in this one.

Analysts see Disney's revenue inching just 5% higher since the prior year's fiscal second quarter. The news gets worse on the bottom line, with Wall Street pros forecasting a profit of $1.10 a share after the House of Mouse rang up $1.11 a share a year earlier.

Weak top-line growth and flat earnings isn't the end of the world (or the end of Disney World). Last year's fiscal second quarter was a beauty of a beast with revenue and adjusted earnings per share climbing 10% and 41%, respectively. Remember Frozen? It was still collecting theatrical receipts and ringing up a ton of merchandise sales through the first three calendar months of 2014 despite being initially released during the holiday season the quarter before that. Frozen teamed up with Thor: The Dark World to see studio entertainment's operating income nearly quadruple. There was also the release of Disney Infinity -- the Skylanders-like video game franchise where Disney character figurines armed with RFID chips dabble in the virtual landscapes -- just ahead of the 2013 holiday season bleeding sales into the media behemoth's fiscal second quarter last year.

In short, last year's fiscal second-quarter report is a hard act to follow. If we go back two years to the fiscal second quarter of 2013 we see adjusted earnings per share climbing from $0.79 to Tuesday afternoon's estimate of $1.10. That's not bad, especially for a big ole blue chip like Disney.

This should still be an exciting report, especially as Disney looks ahead to the strong slate of theatrical releases that kicked off over the weekend with Marvel's The Avengers: Age of Ultron and will wrap up with the highly anticipated return of the Star Wars franchise.

The force will be strong then, of course.  

This doesn't mean that Disney's fiscal second quarter was a wash. Its theme parks likely continued to set new attendance records and performance at ESPN will likely continue to justify the escalating programming costs. The quarter itself won't pack the same kind of fireworks that investors have experienced in recent reports -- even its most recent quarter, when this year's fiscal first quarter delivered year-over-year growth of 9% on the top line and 19% on the bottom line -- but it should be more than enough to meet the market's watered-down expectations.

Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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