On a dreary day for its competitors in the entertainment sector, Disney reported on Tuesday record quarterly earnings of $2.9 billion for the quarter ended Jan. 2, with earnings of $1.73 per share exceeding both analysts’ estimates and year-prior performance.
Led by revenues of $15.24 billion, Disney posted double-digit increases over a year prior for revenue, operating income, net income and free cash flow.
Among the driving forces behind the performance, Disney cited the more than $2 billion worldwide box office for “Star Wars: The Force Awakens,” which it said drove the record income in both its studio entertainment and consumer products/interactive units. The studio’s income was up 86%, while consumer products/interactive grew by 23%.
Led by its domestic destinations, Disney also reported big growth in its parks and resorts operation, where operating income grew 22%.
A consensus among analysts before the report had predicted earnings of $1.45 per share on revenue of $14.75 billion.
“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,” Bob Iger, the company’s chairman and CEO, said in a statement. “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.”
The Q1 results take in initial box office results for “Star Wars: The Force Awakens,” which opened a week before Christmas. The film recently crossed $2 billion in worldwide box office, making it only the third theatrical release to do so, following all-time champ “Avatar” and “Titanic.”
The entertainment conglomerate has a raft of big film releases coming in 2016 from its powerful subsidiaries, Pixar, Marvel and Lucasfilm. Marvel plans to roll out “Captain America: Civil War” in May and “Doctor Strange,” starring Benedict Cumberbatch, in November. Pixar has “Finding Nemo” sequel “Finding Dory” slated for June 17, and Lucasfilm will have its next “Star Wars” offering, “Rogue One,” in theaters next Christmas.
Another revenue driver for the company comes online June 16, when Disneyland Shanghai is set to open its doors for the first time.
Although still a favorite of many analysts, Disney stock has never regained the heights it scaled earlier last year, when shares reached more than $121. A sell-off of Disney and other media stocks followed the revelation in an August earnings call that the conglomerate’s biggest earner, ESPN, had suffered “some subscriber losses.”
Although Iger assured investors that he and the company remained bullish on the all-sports cable channel, the markets were clearly skittish about the continued flight of some subscribers from cable altogether, while others have opted for “skinny bundles” that do not include ESPN.
Still, most analysts predict an upside for Disney (DIS) shares, with an average target price of $112.97 and continuing kudos from the likes of the Street’s Jim Cramer. Before Tuesday’s report, Cramer asserted: “I have always taken a long-term perspective on Disney, which means buy some before and buy some after.”
The Disney report came on a day in which most of its peers saw their stock drop, Viacom precipitously — off almost 18% on a poor earnings report. Time Warner also dropped, about 6%.