The Walt Disney Company
) continues with its fabulous run as the movie business enjoys
unprecedented success. After record first and second quarters of
fiscal 2014, the company's third-quarter fiscal 2014 earnings were
the highest in its history. The company's earnings came in at $1.28
per share, way ahead of the Zacks Consensus Estimate of $1.17 while
surging 24% year over year.
The Walt Disney Company - Earnings Surprise |
Revenues came in at $12,466 million, up 8% year over year.
Moreover, it surpassed the Zacks Consensus Estimate of $12,162
million. Total segment operating income increased nearly 15% to
$3,857 million, based on strong performance across all divisions,
particularly Studio Entertainment and Interactive segments.
revenues increased 3% year over year to $5,511 million attributable
to 1% rise in Cable Networks revenues to $3,942 million and 7% rise
in Broadcasting revenues to $1,569 million during the quarter.
However, the segment's operating income remained almost flat at
$2,296 million owing to a decrease of 7% in Cable Networks
operating income to $1,942 million run down by a 66% rise in
Broadcasting operating income to $354 million.
Cable Networks operating income declined due to higher programming
costs at ESPN offsetting the increases at ABC network. Broadcasting
operating income grew owing to increased affiliate revenues and
higher program sales.
Parks and Resorts
revenues rose 8% to $3,980 million, while the segment's operating
income increased 23% to $848 million. Shift in Easter timing
benefited Park and Resorts performance greatly. Domestic operations
were robust but Disneyland Paris witnessed reduced footfall.
In the quarter, per capita spending in the Parks grew 8% on
increased ticket prices and food and beverage spending. Management
stated that so far in the fourth quarter of fiscal 2014, domestic
resort reservations have risen 5% year over year, while booking
rates are up 3%.
revenues rose 14% to $1,807 million, while operating income of $411
million registered a substantial year-over-year gain. The
stupendous success of
Captain America: The Winter Soldier
led to higher domestic home entertainment revenues and
international theatrical results.
Recently released movie,
Guardians of the Galaxy
has made a stellar debut at the box office amassing over $94
million in its opening weekend. The success once again proves the
value of Marvel Entertainment. Disney acquired Marvel studios in
2009. Ever since, Marvel has delivered a string of blockbuster hits
for the company.
We believe that the studio will continue with its success story
unabated as it boasts of an impressive line up of new movies. Among
these are two of next year's highly anticipated movies namely
Avengers: Age of Ultron
Along with Marvel movies, Disney also has a couple of animated
movies from Pixar lined up for 2015. Moreover,
Star Wars Episode VII
, Disney's most ambitious project in recent times, is slated to
release on Dec 18, 2015. The segment is poised for delivering
record revenues in the upcoming quarters.
revenues increased 16% to $902 million, while segment operating
income rose 25% to $273 million, owing to gains from Merchandise
Licensing and the Retail business.
revenues for the quarter rose 45% to $266 million, while operating
profit was $29 million, up from a loss of 58 million in the
prior-year quarter. The increment was on the back of rise in
console game sales (especially Disney Infinity, Tsum Tsum and
Frozen Free Fall), lower development costs and the continuously
growing Japan mobile business.
Other Financial Details
During the first nine months of 2014, Disney generated free cash
flow of $4,427 million, down 9.8% year over year. The company ended
the quarter with cash and cash equivalents of $4,090 million,
borrowings of $12,920 million and shareholder's equity of $45,520
million, excluding non-controlling interest of $3,092 million.
Though cash flow generation fell year over year, it is strong
enough to position the company favorably to enhance shareholder
value through share repurchases. In the reported quarter, Disney
bought back 22.8 million shares for approximately $1.8 billion.
Year to date, it repurchased 74.3 million shares worth
approximately $5.6 billion.
Needless to say, Disney is firing on all cylinders and is expected
to continue with its remarkable achievement in the upcoming
Currently, Disney carries a Zacks Rank #3 (Hold). Another media
stock worth investment includes Pearson plc (
), which carries a Zacks Rank #2 (Buy).
This week will also see two other media giants reporting quarterly
results, namely Twenty-First Century Fox, Inc. (
) on Aug 6 and CBS Corp. (
) on Aug 7.
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