Expectations were high heading into Walt Disney's (NYSE:DIS) quarterly report on Tuesday. The stock hit a new all-time high earlier in the day, and then it was up to the financials to keep the good times going.
Well, that didn't happen. Disney's fiscal third quarter proved to be a mixed showing, with revenue falling just short of Wall Street's targets and earnings landing ahead of where the pros were parked.
Revenue climbed just 5% since the prior year to hit $13.1 billion. It was Disney's weakest year-over-year top-line growth in two years. There were several largely expected factors that kept Disney's stride in check, and we'll get to that shortly.
Working our way down the income statement, we see Disney's profit clocking in at $1.45 a share, 13% ahead of last year and just ahead of analyst forecasts of $1.44 a share in earnings.
All but one of Disney's five segments posted year-over-year growth in revenue and operating income. The lone holdout was the family-entertainment giant's interactive division, but that wasn't a surprise, since its performance this time around was stacked up against the prior year's quarter, when Disney Infinity was dazzling young gamers during its rookie season.
Disney's two largest segments -- media networks and theme parks, accounting for more than 75% of the quarter's revenue -- experienced decelerating growth during the period, sinking its chances for a blowout performance. Media networks revenue grew just 5% ahead of the prior year's fiscal third quarter as lower ratings on the broadcasting side ate into ad revenue. Disney's theme-parks juggernaut posted only a 4% year-over-year advance in revenue, and that may seem problematic, but the patron-magnetic Easter holiday fell in March this time around instead of April, as it did the year before. Disney did manage to grow its turnstile clicks, and guests spent more.
Disney's studio-entertainment and consumer-products segments, combining to account for less than a quarter of total revenue, were the conglomerate's fastest growing divisions. They also both posted double-digit year-over-year growth in operating income, helping pace the bottom-line beat.
The stock initially dipped following the Tuesday afternoon report, but that doesn't mean the media mogul is broken. The best could be yet to come, with the highly anticipated seventh installment in the Star Wars franchise now just four months away and overdue theme-park enhancements likely to be announced later this month. The catalysts for ratings growth on the broadcast end and new life in the interactive division may be less clear, but Disney has historically found a way to make itself more relevant over time. It wasn't a great quarter, but at the end of the day it was yet another strong earnings report under CEO Bob Iger's tenure.
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.