Are Disney Earnings Good Enough For Investors?

The Walt Disney Co. (NYSE: DIS) released fiscal second-quarter financial results after markets closed Tuesday. The Mouse House said that it had $0.60 in earnings per share (EPS) and $18.01 billion in revenue, compared with consensus estimates that called for $0.88 in EPS and $17.8 billion in revenue. The same period from last year had $1.61 in EPS and $14.92 billion in revenue.

Media Networks revenues for the quarter increased 28% to $7.3 billion, and segment operating income increased 7% to $2.4 billion. This segment comprises Cable Networks and Broadcasting which had revenues of $4.45 billion and $2.81 billion, respectively.

Parks, Experiences and Products revenues for the quarter decreased 10% year over year to $5.5 billion, and segment operating income decreased 58% to $639 million. Lower operating income for the quarter was due to decreases at both the domestic and international parks.

Studio Entertainment revenues increased 18% to $2.5 billion and segment operating income decreased 8% to $466 million. The decrease in operating income was due to lower results at legacy operations, partially offset by the consolidation of the TFCF businesses.

Direct-to-Consumer & International revenues for the quarter increased from $1.1 billion to $4.1 billion and segment operating loss increased from $385 million to $812 million. The increase in operating loss was due to costs associated with the launch of Disney+ and the consolidation of Hulu.

Disney reported that it had 33.5 million subscribers for its Disney+ streaming service. ESPN+ had a total of 7.9 million subscribers and Hulu subscribers totaled 32.1 million.

Bob Chapek, CEO, commented:

While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position. Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.

Disney stock closed Tuesday at $101.09, with a 52-week range of $79.07 to $153.41. The consensus analyst price target is $126.52. Following the announcement, the stock was up about 1% at $102.01 in the after-hours session.

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