The Walt Disney Company, Inc. (NYSE: DIS)
Despite record quarterly earning, the stock of Walt Disney saw heavy selling in after-hours trading on investor concerns that core network subscriptions will continue to decline. Record revenue and earnings attributed to the success of the hit Star Wars movie were overshadowed by a sizable drop in earnings from the media segment including ESPN, which has long accounted for a major portion of Disney’s profit.
Earnings and CEO Comments
Disney’s first quarter revenue grew 14% year over year to $15.2 billion, breaking records and beating consensus estimate of $14.75 billion. Net income climbed 36% year over year to $1.73 per share also beating estimates of $1.44 per share. The blockbuster results of hit movies like Star Wars occur once every several years so analysts and investors are focused on the decline of once reliable ESPN.
During the earnings conference call, Robert A. Iger, Chairman and Chief Executive Officer of Walt Disney Company, tried to assuage those concerns, saying, “I actually believe that this notion that either the expanded basic bundle is experiencing its demise, or that ESPN is cratering in any way from a subscriber perspective is just ridiculous. Sports are too popular. We fully expect our media networks, including ESPN to continue to deliver bottom line growth, which means ad revenue growth will continue to outpace spending.” Yahoo Finance
“Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our Company, marking our 10th consecutive quarter of double-digit EPS growth. We’re very pleased with our results, which continue to validate our strategic focus and investments in brands and franchises to drive long-term growth across the entire Company.” Business Wire
DIS Technical Analysis
Looking back on a daily chart $90 has been a key level for almost a year and a half and has been a reversal support level for over one year. That level was breached on both of the past two trading days and in after-hours trading indicating that the bears are in control. Without an additional catalyst, I anticipate that DIS will trade with market sentiment. If the market and DIS are strong, short-term resistance levels are near $91, $92 and $93. On market weakness look again for the whole dollar levels from $89 through $86.
Walt Disney Company Profile
The Walt Disney Company, incorporated on July 28, 1995, together with its subsidiaries and affiliates, is a diversified international family entertainment and media enterprise with five business segments: media networks, parks and resorts, studio entertainment, consumer products and interactive media. Media Networks comprise an array of broadcast, cable, radio, publishing and digital businesses across two divisions the Disney/ABC Television Group and ESPN Inc. Walt Disney Parks and Resorts (WDP&R) is a provider of family travel and leisure experiences. The Walt Disney Studio brings movies, music and stage plays to consumers throughout the world. Disney Consumer Products (DCP) delivers product experiences across thousands of categories from toys and apparel to books and fine art. Disney Interactive is a creator of interactive entertainment across all current and emerging digital media platforms. Google Finance
