uploads///Disneys Operating Income Is Stalling

Why Disney Stock Fell despite Beating Its Earnings Estimates



Disney’s 3Q17 earnings beat expectations, but revenues miss

Walt Disney (DIS) announced its fiscal 3Q17[1. fiscal 3Q17 ended July 1, 2017] earnings on August 8. Although Disney’s earnings beat Wall Street estimates, its revenues missed analysts’ expectations.

The media giant’s EPS (earnings per share) came in at $1.58 compared with Wall Street’s expectations of $1.55. This EPS trend represents a decline of 2.5% from fiscal 3Q16. The company’s revenues came in at ~$14.2 billion compared with Wall Street expectations of ~$14.4 billion and ~$14.3 billion in fiscal 3Q16.

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ESPN caused cable operating income to plunge

The world’s largest entertainment company said ESPN contributed to a 23% YoY (year-over-year) decline in its cable business’ operating income, compared to Wall Street expectations of a 21% decline. ESPN was weighed down by declining ad revenues and increasing programming costs, among other issues. The company’s stock fell 3% in after-hours trading.

Disney’s Media and Networks segment reported operating income of ~$1.8 billion and missed analysts’ estimates of ~$2.0 billion.

During 3Q17, Disney completed the first year of operations of its Shanghai Disney Resort. In June 2017, Disney stated that over 11 million people visited the Shanghai Disney Resort. The company said that Disneyland Paris and the Shanghai Disney Resort led to the 18% YoY growth in its Theme Park segment, which is the company’s second-largest revenue driver, as the chart above shows.


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