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Here's How Disney (DIS) Stacked Up Against Q4 Estimates

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Shares of Disney (DIS - Free Report) popped after-hours on the back of an earnings and revenue beat, along with a strong showing at the box office. Investors were also likely pleased to hear more streaming updates as the media power prepares to launch its Netflix (NFLX - Free Report) rival late next year.

But we still need to understand how Disney’s individual business units compared to estimates.

Overview

Disney's plan to acquire major 21st Century Fox (FOXA - Free Report) entertainment assets earned approval from the European Commission earlier this week. The EU, the U.S. Justice Department, and both companies’ shareholders have now approved the deal.

Disney now looks set to offer three stand-alone streaming platforms—ESPN+, Hulu, and its Disney-branded platform—as it aims to stand out against Netflix, Amazon (AMZN - Free Report) , and soon Apple (AAPL - Free Report) and AT&T (T - Free Report) . With that said, the company’s Q4 results had little to do with its streaming future.

 

 

Fourth Quarter

Disney’s adjusted quarterly earnings surged 38% from $1.07 per share in the year-ago quarter to reach $1.48 per share. This crushed our $1.31 per share Zacks Consensus Estimate.

Meanwhile, at the top of the income statement, the company’s Q4 revenues climbed 12% to reach $14.307 billion, which also came in well above our $13.81 billion estimate. “We’re very pleased with our financial performance in fiscal 2018, delivering record revenue, net income and earnings per share,” CEO Bob Iger said in a company statement.  

Now let’s see how the firm performed in its key units.

Media Networks

Let’s start with Disney’s Media Networks unit, which is comprised of its cable and broadcast division. Media Networks revenues popped 9% to reach $5.963 billion. This came in well above our $5.688 billion NFM estimate. The company’s broadcasting revenues soared 21%, while its ESPN-driven cable unit popped 5%.

Parks and Resorts

Disney’s Park and Resorts revenues were expected to jump 11.5% from $4.667 billion in the fourth quarter of 2017 to reach $5.204 billion. Instead, Disney’s theme park and resort revenues climbed only 9% to $5.070 billion.

Studio Entertainment

Disney’s Studio Entertainment division proved to be the big Q4 winner. The division’s revenues skyrocketed 50% from $1.432 billion to land at $2.151 billion. Our estimates projected Studio Entertainment would climb by 27.5% to $1.826 billion.

Investors should remember that Studio Entertainment is Disney’s most volatile segment. For instance, Studio Entertainment revenues sunk 21% in the fourth quarter of 2017 and surged 20% in Q3. Disney said the 50% growth was driven by the success of Incredibles 2 and Ant-Man and the Wasp, which were pretty much only going up against Cars 3 in the year-ago period.

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