Disney Stock Rises on 1Q Earnings Report

Posted by Bret on 02/06 at 06:23 PM Category: Disney
CNBC reports that Disney's stock price rose 2% in after-hours trading when the company revealed its first quarter* earnings report.

The company reported higher than expected earnings per share this quarter, to the tune of $1.89 actual vs. $1.61 expected. While revenue missed expected estimates with $15.35 billion actual vs. $15.45 billion expected, the number was significantly higher than the first quarter of fiscal 2017, which came in at $14.8 billion.

Disney's 4 major divisions reported their results as such:

Media and networks: $6.24 billion vs. $6.35 billion expected
Parks and resorts: $5.15 billion vs. $4.86 billion expected
Studio: $2.50 billion vs. $2.75 billion expected
Consumer and interactive: $1.45 billion vs. $1.52 billion

Studio is the one most of us are interested in, as this includes films released this past quarter. The Last Jedi raked in over $1.3B worldwide, while this is enough to put the film 9th all time globally (and 6th domestically), by some accounts it fell to the low end of estimates which some sources put between $1.3B and $1.7B. That difference alone could explain the $250M shortfall in the division's performance. CEO Bob Iger stated that Studio will benefit from:

ticket presales for "Black Panther" [which] are "outpacing every other superhero movie ever made, driven in part to the phenomenal reaction to the premier last week

CNBC reports that Disney also benefited from the recent tax overhaul and other one-time benefits totaling about $1.6 billion.

As for Media and Networks, Bob Iger also announced that the first of two streaming services, ESPN Plus, will cost subscribers $4.99 per month. and will launch in the spring. Iger explained that the service will provide "an array of live programming ... — live sports, live sports events — that is not available on current channels, and that's by the thousands." ESPN has shown a decline in advertising revenue, and Disney hopes the service will provide a shot in the arm to their media division.

Iger has said that the second streaming service, expected in 2019, would be priced far below that of Netflix. The $4.99 price for ESPN Plus might provide some insight as to what the second streaming service might charge.

On another front, investors may still be optimistic about Disney's pending deal to buy Fox. The deal must still clear Federal hurdles, but if approved, would provide a clear path for Disney's announced initiatives for the coming year.

While the DJIA bounced back today after a sudden correction it experienced over the past week, it would seem today's 550 point rise helped fuel Disney's after-hours jump in price, as there was some bargain hunting today across the board. We'll see if how Hasbro does tomorrow.

*Different companies use different fiscal calendars, so while Hasbro, for example, will be reporting its fourth quarter results tomorrow, Disney is reporting on first quarter today.

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