Disney Unveils Some Welcome Surprises for Investors
It was another quarter of reasonable growth and better-than-expected results at Disney (DIS).
The family entertainment giant delivered $9.6 billion in revenue, 6% ahead of where it was a year earlier. Disney's adjusted profit of $0.58 a share was well ahead of both the $0.49 a share it earned a year earlier and the $0.55 a share that analysts were targeting.
Now let's dive further into the real gems in Disney's report.
1. Disney's Theme Parks Are Rocking
Outside of Disneyland Paris, Disney's global empire of gated attractions is growing nicely. Revenue at the company's parks and resorts grew 10%, accompanied by a 53% spike in operating income.
Closer to home, Disney's domestic theme parks saw a 7% gain in turnstile clicks, coupled with a 5% increase in per capita spending. In other words, folks are coming in droves and they're snapping up a lot of mouse ears.
Things should get even better.
Cars Land -- a new Cars-themed area with three new attractions -- opens officially on June 15 at Disney's California Adventure in Anaheim. Down in Florida, the long overdue expansion at Fantasyland begins opening to guests later this year.
2. Don't Wait Up for John Carter: The Ride
The only one of Disney's five subsidiaries to take a step back was its movie-centric studio entertainment division.
It wasn't a surprise. The market knew that John Carter was a disaster, and a massive charge to write down the value of the big-budgeted disappointment was already announced.
The 12% decline in the segment's revenue doesn't sting as much as the $84 million operating loss that reverses a decent profit a year earlier. The segment had enough firepower to overcome Mars Needs Moms when it bombed during the same quarter a year earlier. There just wasn't enough this time.
3. There's More to The Avengers Than a Hit Movie
You have to love Disney's timing. Two days before the company's fiscal second quarter results were announced, Marvel's The Avengers shattered opening-weekend box office records with $207.1 million in North American ticket sales. The movie has already topped $700 million in ticket sales globally.
Nothing successful ends in a single platform at Disney, of course. Disney's making a lot of money with related toys and other licensed consumer products. However, the franchise is also a refreshing hit on Facebook.
Disney revealed that the game Marvel: Avengers Alliance is attracting 1.5 million daily players. Facebook shows that there are 7.2 million active monthly players. Compare that to what's happening over at Electronic Arts (EA), where stock fell on Tuesday after the company revealed that Star Wars: The Old Republic saw its base of gamers fall from 1.7 million to 1.3 million during the first three months of the year. EA's game is a premium title, but Marvel: Avengers Alliance is part of the new way that gaming empires are created and expanded virally as free-to-play social titles.
Taking a page out of Zynga's (ZNGA) playbook has created some intriguing interactive media opportunities. That's another segment that delivered double-digit revenue growth, though it's still not profitable.
However, the success of Marvel: Avengers Alliance, Gardens of Time, and Animal Kingdom on Facebook are improving Disney's visibility on the top social-networking website with three titles attracting more than a million monthly players apiece.
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4. Disney's Almost Running on All Cylinders
It's rare to see the House of Mouse thriving on all five fronts, and it came close this time. Back out the studio that got John Carter-ized and the four remaining segments delivered revenue and operating income growth.
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Back out the company's consumer products division, and the other three divisions posted healthy revenue growth and expanding operating profit margins.
Keep an eye out for next year's fiscal second quarter. If the global economy is cooperating, all of Disney's moving parts should be improving -- especially the studio, which will be pitted against this dud of a performance.
5. Disney's Going to Miss Bob Iger
Beating Wall Street profit estimates isn't much of a surprise anymore. It's what Disney has done in all but two quarters under Bob Iger's tenure as CEO. After a volatile close to Michael Eisner's run, Iger has provided stability and harmony.
Investors better not get used to it. Iger announced several months ago that he plans to step down in three years. The move should provide an orderly transfer of power, and plenty of time to single out a worthy heir.
At least Disney shareholders can look forward to three years of stability.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. The Motley Fool owns shares of Disney. Motley Fool newsletter services have recommended buying shares of Disney.
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