Market Overview

Disney Trades Up on The Avengers Profit

The Walt Disney Company (NYSE: DIS) traded slightly up on Wednesday after the company reported third quarter earnings on Tuesday after market close. The company's third-quarter results exceeded expectations for earnings, but revenues came in lower than anticipated.

Disney reported third-quarter earnings of $1.01 per share on revenues of $11.09 billion in contrast to analyst estimates of $0.93 per share on revenues of $11.32 billion. Revenues may have been hurt be a decrease in its interactive segment and flat revenues at its studio entertainment segment.

Disney's Chairman and CEO Robert A. Iger stated, “We had a phenomenal third quarter, delivering the largest quarterly earnings in the history of our company. Earnings per share were up 31% over last year, driven by growth in every one of our businesses. We also delivered record earnings per share for the first nine months of our fiscal year, and we believe our results clearly demonstrate Disney's unique value proposition and great potential to deliver long-term growth.”

Disney experienced higher operating income due to an increase in worldwide theatrical and television results, which was offset by a decrease in worldwide home entertainment. Disney's movie The Avengers grossed almost $1.5 billion in box-office worldwide, making it the third highest grossing movie of all time. This could have contributed to the increase in the company's worldwide theatrical results.

In 2009 Disney acquired Marvel, which has produced popular movies such as The Avengers, Thor, Captain America and the Iron Man movies. If Disney continues to acquire companies such as Marvel and Pixar, the company could continue to release high grossing movies.

Disney also sees potential in ESPN and ABC network's revenue growth. In the third quarter, ESPN ad revenue was up about 15 percent higher than the same period last year. Disney continues to experienced growth in viewership and subscribership in ESPN. Although Disney is experiencing lower advertising revenue in the past weeks because of the 2012 London Olympics, the company is still pleased with the strong demand for ABC and ESPN experienced earlier in the year.

A competitor that could be taking viewers away from Disney's networks is Comcast-owned (NASDAQ: CMCSA) NBCUniversal. NBCUniversal has exclusive rights to the Olympics, which have seen high popularity amongst viewers. Comcast is now expecting to break even from the Olympics, once predicting that it would take a $200 million loss from the games. Higher than expected popularity for the Olympics could hurt Disney's numbers in the short run.

Walt Disney hit its 52-week high and traded up about 1.2 percent on Wednesday.

Posted-In: Earnings Long Ideas News Short Ideas Movers & Shakers Management M&A Movers Best of Benzinga

 

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