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Can Solid Box Office Collection Aid Disney (DIS) Q3 Earnings?

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Disney’s (DIS - Free Report) Studio Entertainment segment is expected to hog the limelight when the company reports third-quarter fiscal 2018 results on Aug 7.

Despite theatrical disappointment of Solo: A Star Wars Story, we believe back-to-back success of Black Panther and Avengers: Infinity War makes studio business the most important driver in the to-be-reported quarter.

Moreover, mid-June release Incredibles 2 had a great opening. The movie collected $425.5 million domestically at the end of the month and now ranks as the second-largest Pixar release ever.

Notably, Disney dominated June with five films grossing more than $556 million collectively. Per data from Box Office Mojo, Comcast’s (CMCSA - Free Report) Universal came second among all studios at the end of the month.

Click here to know how Disney’s overall Q3 performance is likely to be.

Expectations Strong

In the last reported quarter, Studio Entertainment segment revenues (16.9% of second-quarter revenues) increased 21% year over year to $2.45 billion. The segment’s operating income surged 29.1% to $847 million, driven by strong growth in theatrical, home entertainment and TV/SVOD distribution.


Disney has collected $2.2 billion in domestic ticket sales at the end of June in 2018, 66.4% higher than the same period last year. This robust performance is expected to drive strong top-line growth in the to-be-reported quarter.

The Zacks Consensus Estimate for third-quarter Studio Entertainment revenues stands at $3.01 billion, reflecting almost 26% year-over-year growth. The consensus mark for Studio Entertainment’s operating income stands at $891 million, reflecting 39.4% year-over-year growth.

Zacks Rank & Stocks to Consider

Currently, Disney carries a Zacks Rank #4 (Sell).

Weight Watchers International (WTW - Free Report) and The E.W. Scripps Company (SSP - Free Report) are stocks worth considering in the broader Consumer Discretionary sector. Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Weight Watchers and The E.W. Scripps is currently pegged at 17.5% and 6.3%, respectively.

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