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Disney Earnings on Tap -- What to Watch

Young boy standing next to a Disney employee in Pluto costume in front of a ferry boat at a Disney theme park.

Walt Disney Co. (NYSE: DIS) is slated to report its fiscal third-quarter 2018 financial results after the market close on Tuesday, Aug. 7.

The entertainment titan is barreling toward its earnings report with solid momentum. Last quarter , revenue increased 9% year over year, earnings per share soared 30%, and EPS adjusted for one-time factors jumped 23%. Earnings surpassed many investors expectations, as they did in the first quarter .

After a tough fiscal 2017 , Disney's improved financial performance so far this fiscal year, along with investor optimism, has begun moving the stock in the right direction. Shares have returned 7% so far in 2018 through Friday, just about on par with the S&P 500 's 7.4% return.

Young boy standing next to a Disney employee in Pluto costume in front of a ferry boat at a Disney theme park.

Image source: Disney.

The headline numbers

Here are the year-ago period's results to use as benchmarks:

Metric Q3 2017 Result
Revenue $14.24 billion
Adjusted earnings per share (EPS) $1.58

Data source: Disney.

Disney doesn't provide guidance. For some context -- though long-term investors shouldn't place too much weight on Wall Street's short-term estimates -- analysts expect the The House of Mouse will earn $1.96 per share on revenue of $15.32 billion, representing growth of 24.1% and 7.6% year over year, respectively.

Media networks: Demand for ESPN+, acquisition update

Investors can probably expect operating profit to continue to decline year over year in Disney's cable business, as more and more consumers ditch cable and hop on the video-streaming bandwagon.

The primary focus should be on how well Disney is setting itself up to thrive over the long term in the shifting TV-viewing environment. Hopefully, management will provide an update on the earnings call on how the company's first direct-to-consumer, subscription streaming product, ESPN+, is faring in the market. The service rolled out in April. Investors might also get some information about the company's broader streaming service, which is slated to launch in late 2019.

CEO Bob Iger could also provide an update on the call about Disney's pending huge acquisition of Twenty-First Century Fox 's entertainment assets.

Studio entertainment: Expect another Marvel-led mighty quarter

Disney's movie business had a great quarter last quarter, and investors can count on a sequel. The company released two blockbusters in the third quarter -- Avengers: Infinity War and The Incredibles 2. The Marvel film has raked in $2.04 billion at the box office as of Saturday morning, making it by far 2018's top-grossing movie worldwide, while Pixar's Incredibles 2 is the year's fourth top grosser. The quarter will also get a boost from the release of Marvel's Black Panther -- the year's second top-grossing flick -- on DVD. Couple this winning trio with the fact that the segment's results in the year-ago quarter were sluggish, and it's a no-brainer that year-over-year numbers will be good. The only question is how good.

Parks and resorts: Tough comparables, but the workhorse should be up to the challenge

Parks and resorts is going up against tough year-over-year comparables, as revenue and operating income jumped 12% and 18% year over year, respectively, in the third quarter of fiscal 2017. Moreover, it faces a challenge related to fiscal calendar year timing: The Easter holiday occurred in the second quarter this fiscal year, versus in the third quarter in the year-ago period.

Nevertheless, this is the horse never to bet against. It's the company's consistently good performer: Last quarter, revenue and operating profit increased 13% and 27%, respectively, after increasing 13% and 21%, respectively, in the first quarter.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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