We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Disney Q3 Earnings Surpass Estimates, Revenues Increase Y/Y
Read MoreHide Full Article
Key Takeaways
Disney posted Q3 adjusted EPS of $2.06, up 28% year over year, beating estimates.
DIS more than doubled SVOD operating income as subscribers, pricing and Disney churn improved.
Disney raised its fiscal 2026 share repurchase target to at least $9 billion and reiterated EPS growth.
The Walt Disney Company (DIS - Free Report) reported third-quarter fiscal 2026 adjusted earnings of $2.06 per share, up 28% year over year, beating the Zacks consensus estimate of $1.88 by 9.6%.
Revenues of $25.25 billion rose 7% year over year, missing the consensus mark of $25.48 billion by 0.9%.
Strong growth in the Experiences business and a sharp improvement in the Entertainment segment supported earnings growth.
The Walt Disney Company Price, Consensus and EPS Surprise
DIS Entertainment Segment Delivers Strong Profit Growth
Entertainment revenues (44.9% of total revenues) increased 6% year over year to $11.35 billion. Subscription and affiliate fees increased 12% to $7.55 billion, while advertising revenues declined 1% to $1.63 billion. Content sales revenues decreased 6% to $1.6 billion.
Entertainment segment operating income surged 64% year over year to $1.68 billion. The improvement reflected higher subscription and affiliate fee revenues, while total costs and expenses remained essentially flat as lower selling, general and administrative expenses offset increases in programming, technology and depreciation costs.
Disney Streaming Business Continues to Improve
Entertainment SVOD revenues increased 11% year over year to $5.53 billion. Subscription revenues rose 15% to $4.72 billion, while advertising revenues increased 3% to $851 million.
Entertainment SVOD operating income more than doubled to $712 million from $329 million in the year-ago quarter. Subscription revenue growth was driven by higher subscribers, improved pricing and favorable foreign exchange. Disney also highlighted lower Disney+ churn, continued Hulu integration and plans to introduce additional membership features beginning in spring 2027.
DIS Sports Business Faces Cost Headwinds
Sports revenues (17.8% of total revenues) increased 4% year over year to $4.5 billion. Subscription and affiliate fees rose 8% to $3.14 billion, while advertising revenues increased 5% to $1.2 billion. Other revenues declined 41% due to the absence of Ultimate Fighting Championship pay-per-view revenues recorded in the prior-year quarter.
Sports segment operating income declined 17% year over year to $858 million. Higher contractual programming costs, new sports rights costs, the timing of NBA rights cost recognition under renewed contracts and increased sales and marketing expenses weighed on profitability. Management also cited early NBA playoff sweeps and a network carriage dispute as additional headwinds during the quarter.
Disney Experiences Business Leads Growth
Experiences revenues (39.5% of total revenues) increased 10% year over year to $9.97 billion. Segment operating income increased 20% year over year to $3.02 billion, making it the strongest-performing business during the quarter.
Domestic parks and experiences benefited from higher guest volumes, stronger per capita spending and contributions from the expanded Disney Cruise Line fleet. Consumer Products revenues increased 7% year over year, supported by merchandise sales related to Toy Story 5 and Star Wars: The Mandalorian and Grogu. The company also recorded an approximately $100 million tariff refund, which contributed roughly four percentage points to Experiences operating income growth.
Balance Sheet and Cash Flow
As of June 27, 2026, cash and cash equivalents totaled $5.19 billion, down from $5.68 billion as of March 28, 2026. Current borrowings declined sequentially to $8.63 billion from $8.89 billion, while long-term borrowings decreased to $37.41 billion from $38.47 billion.
During the third quarter, cash provided by operating activities increased 33% year over year to $4.87 billion, while free cash flow increased 63% year over year to $3.07 billion.
Disney’s Q4 and Fiscal 2026 Outlook
For the fourth quarter of fiscal 2026, Disney expects total segment operating income of approximately $4.9 billion, including the benefit of the 53rd week. For fiscal 2026, the company reiterated adjusted earnings growth of approximately 12%, excluding the 53rd week, or approximately 16% including it. Disney also raised its fiscal 2026 share repurchase target to at least $9 billion from at least $8 billion and continues to expect double-digit adjusted earnings growth in fiscal 2027.
American Public Education is set to report second-quarter 2026 results on Aug. 10. The Zacks Consensus Estimate for American Public Education’s second-quarter EPS is pegged at 36 cents, unchanged over the past 30 days and indicating an improvement of 1900% year over year.
Newsmax is slated to report second-quarter 2026 results on Aug. 13. The Zacks Consensus Estimate for Newsmax’s second-quarter loss is pegged at 2 cents per share, unchanged over the past 30 days and indicating an improvement of 96.61% year over year.
Target Hospitality is slated to report second-quarter 2026 results on Aug. 10. The Zacks Consensus Estimate for Target Hospitality’s second-quarter loss is pegged at 10 cents per share, unchanged over the past 30 days and indicating an improvement of 33.33% year over year.
View the Zacks #1 Rank List
Image: Bigstock
Disney Q3 Earnings Surpass Estimates, Revenues Increase Y/Y
Key Takeaways
The Walt Disney Company (DIS - Free Report) reported third-quarter fiscal 2026 adjusted earnings of $2.06 per share, up 28% year over year, beating the Zacks consensus estimate of $1.88 by 9.6%.
Revenues of $25.25 billion rose 7% year over year, missing the consensus mark of $25.48 billion by 0.9%.
Strong growth in the Experiences business and a sharp improvement in the Entertainment segment supported earnings growth.
The Walt Disney Company Price, Consensus and EPS Surprise
The Walt Disney Company price-consensus-eps-surprise-chart | The Walt Disney Company Quote
DIS Entertainment Segment Delivers Strong Profit Growth
Entertainment revenues (44.9% of total revenues) increased 6% year over year to $11.35 billion. Subscription and affiliate fees increased 12% to $7.55 billion, while advertising revenues declined 1% to $1.63 billion. Content sales revenues decreased 6% to $1.6 billion.
Entertainment segment operating income surged 64% year over year to $1.68 billion. The improvement reflected higher subscription and affiliate fee revenues, while total costs and expenses remained essentially flat as lower selling, general and administrative expenses offset increases in programming, technology and depreciation costs.
Disney Streaming Business Continues to Improve
Entertainment SVOD revenues increased 11% year over year to $5.53 billion. Subscription revenues rose 15% to $4.72 billion, while advertising revenues increased 3% to $851 million.
Entertainment SVOD operating income more than doubled to $712 million from $329 million in the year-ago quarter. Subscription revenue growth was driven by higher subscribers, improved pricing and favorable foreign exchange. Disney also highlighted lower Disney+ churn, continued Hulu integration and plans to introduce additional membership features beginning in spring 2027.
DIS Sports Business Faces Cost Headwinds
Sports revenues (17.8% of total revenues) increased 4% year over year to $4.5 billion. Subscription and affiliate fees rose 8% to $3.14 billion, while advertising revenues increased 5% to $1.2 billion. Other revenues declined 41% due to the absence of Ultimate Fighting Championship pay-per-view revenues recorded in the prior-year quarter.
Sports segment operating income declined 17% year over year to $858 million. Higher contractual programming costs, new sports rights costs, the timing of NBA rights cost recognition under renewed contracts and increased sales and marketing expenses weighed on profitability. Management also cited early NBA playoff sweeps and a network carriage dispute as additional headwinds during the quarter.
Disney Experiences Business Leads Growth
Experiences revenues (39.5% of total revenues) increased 10% year over year to $9.97 billion. Segment operating income increased 20% year over year to $3.02 billion, making it the strongest-performing business during the quarter.
Domestic parks and experiences benefited from higher guest volumes, stronger per capita spending and contributions from the expanded Disney Cruise Line fleet. Consumer Products revenues increased 7% year over year, supported by merchandise sales related to Toy Story 5 and Star Wars: The Mandalorian and Grogu. The company also recorded an approximately $100 million tariff refund, which contributed roughly four percentage points to Experiences operating income growth.
Balance Sheet and Cash Flow
As of June 27, 2026, cash and cash equivalents totaled $5.19 billion, down from $5.68 billion as of March 28, 2026. Current borrowings declined sequentially to $8.63 billion from $8.89 billion, while long-term borrowings decreased to $37.41 billion from $38.47 billion.
During the third quarter, cash provided by operating activities increased 33% year over year to $4.87 billion, while free cash flow increased 63% year over year to $3.07 billion.
Disney’s Q4 and Fiscal 2026 Outlook
For the fourth quarter of fiscal 2026, Disney expects total segment operating income of approximately $4.9 billion, including the benefit of the 53rd week. For fiscal 2026, the company reiterated adjusted earnings growth of approximately 12%, excluding the 53rd week, or approximately 16% including it. Disney also raised its fiscal 2026 share repurchase target to at least $9 billion from at least $8 billion and continues to expect double-digit adjusted earnings growth in fiscal 2027.
Zacks Rank & Stocks to Consider
Disney currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are American Public Education (APEI - Free Report) , Newsmax (NMAX - Free Report) and Target Hospitality (TH - Free Report) . Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Public Education is set to report second-quarter 2026 results on Aug. 10. The Zacks Consensus Estimate for American Public Education’s second-quarter EPS is pegged at 36 cents, unchanged over the past 30 days and indicating an improvement of 1900% year over year.
Newsmax is slated to report second-quarter 2026 results on Aug. 13. The Zacks Consensus Estimate for Newsmax’s second-quarter loss is pegged at 2 cents per share, unchanged over the past 30 days and indicating an improvement of 96.61% year over year.
Target Hospitality is slated to report second-quarter 2026 results on Aug. 10. The Zacks Consensus Estimate for Target Hospitality’s second-quarter loss is pegged at 10 cents per share, unchanged over the past 30 days and indicating an improvement of 33.33% year over year.