The Walt Disney Company
) posted outstanding second-quarter fiscal 2014 results after the
closing bell yesterday. The company's adjusted earnings came in
at $1.11 per share, outpacing the Zacks Consensus Estimate of 97
cents while surging 41% year over year.
The Walt Disney Company - Quarterly Earnings
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Continued double-digit revenue growth across Studio
Entertainment, Consumer Products as well as Interactive
businesses led to the impressive quarterly performance. A special
mention for the incredible success of the animated movie "Frozen"
that has surpassed $1 billion in revenues to become the highest
grossing animated film of all time and has been instrumental in
driving stellar results.
Including one-time items, earnings were $1.08 per share, up
nearly 30% from the prior-year quarter.
Revenues came in at $11,649 million, up 10% year over year.
Moreover, it surpassed the Zacks Consensus Estimate of $11,216
million. Total segment operating income increased nearly 34% to
$3,353 million, based on strong performance across all divisions,
particularly Studio Entertainment and Interactive segments.
revenues increased 4% year over year to $5,134 million
attributable to 5% rise in
revenues to $3,633 million.
revenues were almost flat at $1,501 million during the quarter.
The segment's operating income increased 15% to $2,133 million
owing to an increase of 15% in
operating income to $1,974 million, which reflected growth at the
domestic Disney Channels and ESPN along with increased equity
income from A&E Television Networks (AETN).
operating income grew 15% to $159 million owing to increased
affiliate revenues and lower general and administrative expenses.
These were partly offset by reduced Network primetime advertising
Parks and Resorts
revenues rose 8% to $3,562 million, while the segment's operating
income increased 19% to $457 million. Growth was due to record
footfall at Walt Disney World and Hong Kong Disneyland partly
offset by increased costs related to roll out of MyMagic+.
In the quarter, per capita spending in the Parks grew 4% on
increased ticket prices and food and beverage spending.
Management stated that so far in the third quarter of fiscal
2014, domestic resort reservations have risen 3% year over year,
while booked rates are up 6%.
Recently, the company has announced an additional investment in
Shanghai Disney resort. An anticipated boom in China's travel and
tourism market has prompted Disney to increase investment in the
Studio Entertainment revenues rose 35% to $1,800 million, while
operating income registered a substantial year-over-year gain to
$475 million. The stupendous success of the "Frozen" followed by
Thor: The Dark World led to higher domestic home entertainment
revenues and international theatrical results leading to higher
segment revenues. Moreover, increased number of titles
available for TV/SVOD distribution contributed to higher
Disney expects the success of
Captain America: The Winter Soldier
to boost third quarter revenues and anticipates momentum in the
segment to continue in the quarters ahead as its boasts a strong
number of movies in the pipeline including
Guardians of Galaxy
Avengers: Age of Ultron
Star Wars Episode VII
, Disney's most ambitious project in recent times, is slated to
release on Dec 18, 2015.
revenues increased 16% to $885 million, while segment operating
income rose 37% to $274 million, owing to gains from Merchandise
Licensing and the retail business.
revenues for the quarter rose 38% to $268 million, while
operating profit was $14 million, up from a loss of 54 million in
the prior-year quarter. The increment was on the back of rise in
console game sales (especially Disney Infinity) and the
continuously growing Japan mobile business. Notably, management
had expected to post a loss for the quarter during the first
quarter 2014 earnings release.
Other Financial Details
During the first half of 2014, Disney generated free cash flow of
$2,380 million, up 9% year over year. The company ended the
quarter with cash and cash equivalents of $4,098 million,
borrowings of $10,909 million and shareholder equity of $44,889
million, excluding non-controlling interest of $2,751 million.
Strong cash flow generation positions the company favorably to
enhance shareholders value through share repurchases. In the
reported quarter, Disney bought back 19.9 million shares for
approximately $1.5 billion. Year to date, it repurchased 58.2
million shares worth approximately $4.3 billion.
Capital expenditure during the quarter increased 21.4% to $1,359
million mainly due to higher construction costs for Shanghai
Needless to say, Disney is firing on all cylinders and is
expected to continue with its fabulous run in the upcoming
Currently, Disney carries a Zacks Rank #2 (Buy). Another media
stock worth investment includes
Lions Gate Entertainment Corp.
), which carries a Zacks Rank #1 (Strong Buy).
This week will also see two other media giants reporting
quarterly results, namely
Twenty-First Century Fox, Inc.
) on May 7 and
) on May 8.
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