Disney (DIS) Beats the Street on Strong Theme Park and TV Numbers

After being pummeled after missing earnings last quarter, shares of Walt Disney (DIS: Charts, News) have risen from the ashes by surprisingly beating analyst estimates last month. For its fourth quarter, the world's largest theme-park operator and diversified media company posted earnings of 59 cents per share on revenue of $10.4 billion, marking a 30% gain in profits and 7% increase in sales over the prior year quarter.

Earnings exceeded the analysts' consensus of 55 cents per share as well as the whisper number of 58 cents, while revenue matched estimates. Disney attributed its strong results to growth in its TV empire as well as higher prices at its U.S. resorts. Daily Chart
The company's cable networks' profit rose 18% to $1.26 billion, while its revenue grew 11% to $3.47 billion. Disney attributed its strength in cable programming to growth in its Disney Channel programming, higher fees from pay-TV companies and higher ad revenue. In addition, ESPN remains the backbone of Disney's cable empire, despite the NBA lockout, with audience ratings increasing 13% for the quarter. At ABC broadcasting, its network flagship channel, profit rose 37% to $201 million, while revenue increased 4%, due to increased network ad revenue and reduced programming and production costs. CEO Robert Iger emphasized "very promising signs" with ABC's new shows, including "Once Upon a Time", "Revenge" and "Suburgatory". Meanwhile, its theme park business, which had worried analysts due to its reliance on a strong economy, posted a profit increase of 33% to $421 million on a 11% revenue increase to $3.13 billion. Disney attributed its strong results to increased ticket prices, higher room rates and higher prices throughout its parks - all of which have boosted margins to offset the risk of lower sales volume. Despite a shaky macro environment, domestic hotel reservations have not wavered since the prior year quarter, which has made its rate increases even more profitable. Iger acknowledged that the European debt crisis is likely to impact its Disneyland Paris theme park, which has traditionally been a laggard trailing its American and Asian counterparts. The company's Disney Dream cruise ship, the company's third cruise ship, has helped boost its cruise line profits since commencing its service in January. Its film studio results rose 13% to $117 million while revenue decreased 8%. The company has been currently reducing its studio business and shifting production over to its subsidiary, Marvel Studios. While the company bombed in the third quarter from "Mars Needs Moms", the fourth quarter was highlighted by the comparative success of "The Lion King 3D" - which generated $93.4 million in ticket sales on a tiny reissue budget. This helped offset the soft ticket sales of Pixar's "Cars 2", which failed to match the revenue of last year's hit, "Toy Story 3". With the success of the "Lion King" re-release, it can be safe to assume that other classics from the 1990s - such as Aladdin, Beauty and the Beast and the Little Mermaid - aren't far behind. In addition, Disney's Marvel Universe will come to a head with the Avengers, slated for release in May 2012, which may blast open the doors for a new era of tremendously popular super hero films. Disney's consumer products unit, which includes toys and merchandise, posted a 13% gain in profit to $207 million on a 12% gain in revenue to $816 million - mainly attributed to its "Cars" and Marvel Universe merchandise. Disney Interactive, which produces video games, narrowed its loss from $104 million to $94 million by reducing marketing outlays and product development costs. Disney Interactive recently inked a partnership with Google's (GOOG: Charts, News) YouTube to create co-branded short family films for young viewers, which is expected to reduce costs and the current burdens of the business segment. Shares of Disney currently trade at approximately 12 times forward earnings, and pays a quarterly dividend of 40 cents per share, which it has steadily raised since 1987. Most analysts believe that Disney shares are undervalued, but are fear the macro impacts from an unstable global economy. Any progress on the European debt crisis and U.S. employment is likely to boost shares considerably in the near future. Other News About DIS Disney 4Q beats Street on pay TV Disney surprisingly beats analysts' estimates, showing few signs on weakness. Disney leads media shares higher Disney powers up lagging media industry shares. Other Stocks in the News Wal Mart Stores Inc Share Price Target Raised to $64.00 Can Wal Mart finally become a growth stock again? Can Google Stay Out of Its Own Way? Is Google its own worst enemy? Copyright 2011 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. 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Published on Dec 5, 2011
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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