Walt Disney (DIS, Financial) is a global leader in the entertainment industry and has been delivering strong results that catch the eye of investor. The sales of the company have been outrageously successful with considerable growth in sales and profit, in past few years. This growth had a direct impact on its stock prices and investors rewarded with huge gains. Disney stock has gained around 200%, in past five years.
Quarter overview
The company recently released its first quarter results and displayed a strong performance. The company generates revenue from five different streams –Â Media Networks, Parks & Resorts, Studio Entertainment, Consumer Products and Interactive. The consolidated revenue was up by 9% year over year, to records $13,391 million as compared to $12,309 in the same terms last year.
Segmental Revenue
| Ă‚ | Segment | Revenue (Q1-2015) | Revenue (Q1-2015) | Contribution In Total Revenue | Growth/ (Loss) |
| 1 | Media Networks | 5,860 | 5,290 | 43.8% | 11% |
| 2 | Parks & Resorts | 3,910 | 3,597 | 29.2% | 9% |
| 3 | Studio Entertainment | 1,858 | 1,893 | 13.9% | (2% ) |
| 4 | Consumer Products | 1,379 | 1,126 | 10.3% | 22% |
| 5 | Interactive | 384 | 403 | 2.9% | (5%)% |
Media network contributed over 48% to the consolidated revenue. This stream recorded year-over-year growth of 11. The gain was mainly due to increased licensing fees and growth in a number of new franchisees. Higher sales of programs like Criminal Minds, Scandals and Once Upon A Time, also leveraged revenue growth for this segment
Parks and resort segment which contributed over 29% to the consolidated revenue witnessed a growth mainly due to the strong performance in the domestic market and partly offset by international market. Growth was leveraged by the cruise business that witnessed higher traffic primarily due to the impact of Disney Magic. Higher expenditures by visitors was one of the most important factors of the growth.
Studio entertainment declined 2% year over year, to record 1,858 million and contributed over 13% to the consolidated revenue. The studio entertainment witnessed decline mainly due to weak performance of the theatrical distribution results. This also reflected the performance of Big Hero 6 in the current quarter if compared to the performance Frozen in the same tenure last year. Despite the decline in revenue, the operating income grew 33% year over year, to record $544 million. This was mainly due to strong performance of home entertainment and strong TV/SVOD distribution with more titles available internationally.
Consumer product was on the top of the growth charts as it grew 22% year over year, to record $1.4 billion. The operating income of this segment also recorded year over year growth of 46%, to record $626 million. This gain was influenced by strong performance of merchandise based on Frozen and moderate performance of Disney Channel properties, Mickey and Minnie, Spider-Man and Avengers. The Retail business also contributed to income growth with the increase on comp store sale and increased online sales of Frozen merchandise
The company also plans to launch various new attractions at EPCOT. This attraction will be based on the hit movie “Frozen.” The company expects this to be open for the public in 2016. The fans of "Frozen" are eagerly waiting for this launch and will certainly provide a growth to the top line of the company in future.
Conclusion
The company has been recording growth in various revenue streams. The operating income of the company is also gaining that has influence the bottom line. The company also stays focused for enhancement of facilities and features to its parks and resorts that provide maximum satisfaction to visitors resulting in the higher expenditure by the visitors and this provides growth.
Furthermore with the market cap size over $187 billion, the company maintains an impressive forward P/E of 19.47. This is quite lucrative and can provide good sustained long-term returns.
This entertainment company can be a perfect buy considering its growth performance.
