The Walt Disney Company (DIS, Financial) reported its fourth quarter earnings on Thursday, November 6, after the markets closed and the performance was solid though it missed the Street estimates. Following the release of the quarter results, the initial response in the market was negative and pulled down the share price by around 1%. Though the management was pleased with the results, the stock markets showed a negative response. Let’s quickly dig deeper into the financial playbook and find out the details of the fourth quarter of Walt Disney.
The quarter numbers
The media and broadcasting company delivered earnings and revenue that trailed the Street estimates. Revenue from its cable and broadcasting segment rose to $5.22 billion. This figure which represents the castle in Disney’s holdings was up 5% from the year ago period, but below the $5.25 billion estimated by Street Account analysts. The media conglomerate posted earnings of $0.89 a share, which was above $0.77 per share reported in the year-earlier period.
Overall the total revenue from all the business segments grew to $12.39 billion from $11.57 billion, driven by record park attendance and strong studio sales.
The company was able to meet the analyst consensus of $12.37 billion in revenue and $0.89 a share in earnings for the fourth quarter.
With the close of the fourth quarter, it’s important to judge how the company performed through the entire fiscal year. The best part is that the picture has been a good one for the company in terms of its financial strength. The full year revenue grew 8% to $48.8 billion, while net income improved 22% to $7.5 billion and resulted in earnings of $4.26 a share at the end of the fiscal year. After accounting for special items, the earnings came to $4.32 per share.
Disney’s CEO, Bob Iger stated – “Our results for fiscal 2014 were the highest in the company’s history, marking our fourth consecutive year of record performance. We are obviously pleased with this achievement and believe it reflects the extraordinary quality of our content and our unique ability to leverage success across the company…”
The key driving segments
Disney said that its quarterly results were boosted by income from the studio entertainment section, which saw income of $254 million during the quarter, almost double of what it had fetched in the similar quarter of last year. Such a whopping improvement in the segment was due to the continued popularity of smash-hit movie, ‘Frozen’. Revenue-wise, this segment led to sales growing 18% to $1.8 billion during the quarter. The consumer products segment of Disney saw a sales jump of 7% to $1.07 billion on higher merchandise licensing fees from the ‘Frozen’ movie.
Other segments such as media networks saw revenue grow mainly due to higher cable and broadcasting affiliate fees and increased advertising revenue at ESPN. Iger said that Disney wanted to keep the cable and satellite packages intact even after it faces intense competition from rivals such as CBS (CBS, Financial), because the company to create value for the customers and also urges to remain the value creator for a lot of other companies in the media industry.
Future of company looks promising
During the earnings call, Disney revealed via Twitter that principal photography had been completed for the upcoming movie “Star Wars: The Force Awakens” which is slated to hit the theatres in December 2015. Several stars from the original trilogy would appear in the new flick and would create a new appeal to the Disney faithful customers.
Earlier this week, the media firm has widened the availability of Disney Movies Anywhere- a service that allows users to purchase and store Disney, Pixel and Marvel content on both Apple iOS and Google Android devices.
Also in early October the company board has extended Bob Iger’s terms as CEO through June 2018. The company board regard Iger to be the architect of Disney’s current success. “Under his tenure, Disney has reached unprecedented creative and financial heights, driving the stock price to record levels and creating extraordinary value for shareholders”- stated Orin Smith, an independent director of the Disney board.
Final word
Analysts are happy with the Disney results and the future of the company seems bright enough to sustain this level of performance through the coming fiscal year. Considering the company’s total shareholder return which has increased to 311%, compared with about 92% for the S&P 500, it can be said that investors should hold on to their positions in the stock through the next year as well. It’s best to stay tuned and keep our eyes onto the movement of the Walt Disney stock in the coming months.
