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James Li
James Li
Articles (684)  | Author's Website |

Walt Disney Soars on Earnings Beat

Company advances to direct-to-customer platforms

February 05, 2019 | About:

On Tuesday, Walt Disney Co. (NYSE:DIS), a major diversified media company, rose approximately 1.8% in aftermarket trading on earnings that outperformed analyst estimates.

The Burbank, California-based company reported net earnings of $1.86 per share for the quarter ending Dec. 29, 2018. Even though the reported earnings represented a 36% decline from earnings of $2.91 per share for the prior-year quarter, they still outperformed Refinitiv's estimate of $1.55 per share.

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Company updates on direct-to-customer initiatives

Disney CEO Bob Iger said on the earnings call that the company continues investing in direct-to-customer businesses like ESPN+, a platform that reached 2 million subscribers as of quarter-end, double that from five months ago. Iger said during the question-and-answer section of the call key lessons from ESPN+ included the fact such direct-to-customer platforms make “fantastic marketing tools.”

Iger and Chief Financial Officer Christine McCarthy said throughout the earnings call that in the long term, the new platform Disney+ will produce strong content for the company. Despite this, McCarthy said these investments contributed to an operating loss of $136 million for the company’s direct-to-consumer and international businesses. Further revamp costs for ESPN+ and Disney+ are expected to reduce segment operating incomes by $200 million for fiscal 2019.

Company continues growth momentum

Despite the ongoing investments, Walt Disney’s profitability still ranks 9 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 8 and operating margins that have increased approximately 3.10% per year over the past five years.

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Additionally, the company’s business predictability ranks 4.5 stars out of five on strong and consistent revenue and earnings growth over the past 10 years.

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Gurus riding Walt Disney’s strong growth momentum include Andreas Halvorsen (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio).

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Disclosure: No positions.

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About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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