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Walt Disney Posts Mixed Q2 Results: ETFs in Focus

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Shares of The Walt Disney Company (DIS - Free Report) closed 2.63% lower in after-hours trading on Tuesday, May 9, 2017, owing to the revenue miss in fiscal second-quarter 2017. The company reported a year-over-year decrease of 2.82% in net quarterly revenues.


Fiscal Q2 Performance


Walt Disney reported non-GAAP earnings per share of $1.50, which came ahead of the Zacks Consensus Estimate of $1.45 and the year-ago earnings of $1.36. However, revenues of $13.336 billion missed the consensus mark of $13.478 billion.


Segment Performance


Media Networks reported operating revenues of $5.946 billion, up from $5.793 billion a year ago. Moreover, segment income amounted to $2.223 billion, down from $2.299 billion a year ago. This was brought down by a fall in Cable Networks sub-segment performance, owing to a decrease at ESPN. Disney attributed this decrease to higher programming costs due to a timing shift of College Football Playoff (CFP) bowl games and contractual rate increases for NBA programming (read: ESPN Woes Continue to Haunt Disney, ETFs in Focus).


Parks and Resorts reported operating revenues of $4.299 billion, up from $3.928 billion a year ago. Moreover, segment income amounted to $750 million, up from $624 million a year ago. Increased guest attendance and spending led to positive performance of this segment.


Studio Entertainment reported operating revenues of $2.034 billion, down from $2.062 billion a year ago. Moreover, segment income amounted to $656 million, up from $542 million a year ago. Strong performance of Beauty and the Beast provided support to the segment performance.


Consumer Products & Interactive Media reported operating revenues of $1.057 billion, down from $1.186 billion a year ago. Moreover, segment income amounted to $367 million, up from $357 million a year ago. Lower comparable store sales led to the poor performance.


In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to The Walt Disney Company.


Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)


This fund seeks to provide exposure to the Consumer Discretionary industry. It has AUM of $12.59 billion and charges a fee of 14 basis points a year. The fund has 6.31% exposure to Walt Disney (as of May 8, 2017). The fund returned 15.16% in the past one year and 11.62% in the year-to-date time frame (as of May 9, 2017). It currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.


Vanguard Consumer Discretionary ETF (VCR - Free Report)


This fund has AUM of $2.3 billion and is a relatively cheap bet to play the consumer discretionary sector, as it charges a fee of 10 basis points a year. The fund has a 5.4% exposure to Walt Disney (as of March 31, 2017). The fund returned 16.18% in the past one year and 11.07% in the year-to-date time frame (as of May 9, 2017). It currently has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Diagnosis of Economy on Health Day: 6 ETFs in Fine Fettle).


Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)


This fund has AUM of $289.6 million and is one of the cheapest bets to play the consumer discretionary sector, as it charges a fee of just 8 basis points a year. The fund has a 5.22% exposure to Walt Disney (as of May 8, 2017). The fund returned 16.31% in the past one year and 11.25% in the year-to-date time frame (as of May 9, 2017). It currently has a Zacks ETF Rank #3 with a Medium risk outlook.


Below is a chart comparing the performance of the funds and Walt Disney.


 
Source: Yahoo Finance


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