Disney at 6-Month High After Earnings Beat

Published on Wednesday, 08 February 2012 13:11 Written by J Hawk

New York, February 8^th (TradersHuddle.com) – Burbank, California based Walt Disney Company (NYSE: DIS) posted better than expected fiscal first quarter revenue of $10.779 billion for the accounting period that concluded on December 31^st of 2011. This result was up 1 percent compared with the $10.716 billion in revenues seen in the same quarter of last year.

Most notable perhaps was that the media and entertainment company’s Q1 2012 earnings results demonstrated an impressive 18 percent increase in diluted earnings per share from $0.68 in Q1 2011 to $0.80 in the first quarter of 2012.  Furthermore, net income grew by 12% over the same period from $1.464 billion in Q1 2012 compared with $1.302 billion in Q1 2011.

The announcement was released yesterday, February 7^th, after U.S. stock markets had closed, so the market responded positively this morning to Disney’s latest earnings news, sending the shares to a new long term high of $41.91. As of this writing, the stock was trading somewhat off its highs, but still up $0.71 or +1.73% on the day to the $41.69 per share level in active trading of 10.496 million shares on the New York Stock Exchange.

Analysts’ Consensus Substantially Undershot Disney Earnings per Share

The impressive earnings results that Disney released yesterday improved on market analysts’ consensus expectations for its Q1 2012 earnings per share by a considerable margin.

For example, a survey of market analysts by Zacks Investment Research showed a consensus of $0.71 for Disney’s Q1 2012 earnings per share, while the company’s actual earnings of $0.80 per diluted share was over 12 percent higher.

Disney Shows Overall Gains in Market Segment Results 

In terms of Disney’s performance in its primary market segments, its Media Networks revenues for the quarter was up by 3 percent to $4.8 billion and segment operating income gained by 12 percent to $1.193 billion.

Furthermore, Disney’s Parks and Resorts revenues for the quarter increased by 10 percent to $3.2 billion, and segment operating income increased by 18 percent to $553 million. The company reported that these favorable results were driven by increases in revenue at its domestic parks and resorts, as well as for the Disney Cruise Line.

While the company’s Studio Entertainment revenues decreased by 16 percent to $1.6 billion, its segment operating income gained by 10 percent to $413 million. Disney attributed this drop in revenues to having released less Disney brand titles in the current quarter, as well as reduced DVD sales volumes.

The firm’s Consumer Products division produced comparable operating income of $313 million for the quarter, with revenues showing only a modest 3 percent gain to $948 million.

Nevertheless, Disney’s Interactive Media revenues softened by 20 percent for the quarter to $279 million, as its segment operating results fell by $15 million to show a loss of $28 million. This was blamed on poorer results from its console game business as the company shifts to more social and interactive platforms.

The Technical Picture for Disney Remains Bullish

From a technical perspective, Disney’s (NYSE: DIS) share price has shown a somewhat volatile long term upwards trend that has dominated trading since the first quarter of 2009.

After ranging throughout the first half of 2011, and then declining as far as the $28.19 level by October 3^rd, the stock has since demonstrated an overall upwards trend.

Furthermore, the initial move higher on Disney’s favorable earnings report today has taken the stock to a new six month high at the $41.91 level, breaking resistance at the $40.97 level in the process.

Resistance is now observed at $43.48, $44.13, and at the stock’s all-time high of $44.34. Support is noted at $39.75, $38.38 and $38.02.