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James Li
James Li
Articles (727)  | 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.


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.


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.


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


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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