Known as the company behind everyone’s favorite mouse, Walt Disney (NYSE: DIS) had investors singing “zippidy do-da” after announcing stellar results from its first quarter 2015 earnings report on Tuesday, February 3rd.
Highlights from the report include diluted earnings of $1.27 a share, up 23% from the same quarter a year prior. The house of mouse also posted $13.4 billion in revenue, marking a 9% increase on a year-over-year basis. In addition, Disney raked in $2.18 billion in profit, a 19% increase year-over-year.
More than a year after its theatrical debut, Frozen is still bringing in the majority of Disney’s consumer products revenue, which totaled $1.38 billion. With that said, Disney expects revenue to boost even higher from Frozen merchandise as the company announced plans to show a new Frozen short in theaters at the beginning of its live action Cinderella revival, due to hit theaters on March 13th of this year.
Disney Chief Financial Officer Jay Rasulo believes Frozen to be a “long-term franchise” for the company, which will reflect “in all of [its] divisions.” He added, “I don’t think that we can underestimate the impact that ‘Frozen’ has had across our company in all of our businesses.”
However, Disney has many other franchises in the works that have attributed to the company’s impressive revenue, including Starwars and Marvel.
Disney CEO Robert Iger said of the company’s earnings, “Our results once again reflect the strength of our brands and high quality content and demonstrate that our proven franchise strategy creates long-term value across all of our businesses.”
However, the company’s report was not completely magical, posting declines in advertising revenue and pay-TV subscribers. With that said, Disney is not the only big media conglomerate affected by these factors.
On February 4th BMO Capital Daniel Salmon analyst weighed in on Disney following the company’s Q1 earnings, reiterating an Outperform rating and raising his price target from $105 to $115. The analyst reasoned his bullish rating by noting “Consumer Products is seeing “unique” post-holiday demand, likely caused by continued interest in Frozen. Looking ahead, we see continued catalysts: a) potential for new direct-to-consumer OTT products (under the Disney brand, and possibly Marvel and Star Wars) and ABC retrans supporting affiliate fee growth; b) strong ratings and tighter inventory translating to advertising outperformance vs the group; c) lower gas prices supporting Parks attendance, amplified by the continued success of MyMagic+; and, d) two Star Wars releases through FY2017.”
Daniel Salmon has rated Disney 5 times since May 2013, earning a 100% success rate recommending the company and a +16.9% average return per recommendation. Overall, Salmon has a 76% success rate recommending stocks and a +11.8% average return per recommendation.
Similarly on February 4th, Jefferies analyst John Janedis maintained a Buy rating on Disney with a price target of $105 following the company’s Q1 earnings. The analyst noted, “If there was any doubt about DIS’ ability to monetize content across its platform, creating upside to estimates in the face of ad pressure, today’s results should end that debate. While DIS is trading 15%+ above its avg. multiple vs. the group, we think its valuation has the ability to further decouple from the rest of media.”
John Janedis has rated Disney 6 times since May 2012, earning a 100% success rate recommending the company and a +22.0% average return per recommendation. Overall, Janedis has a 76% success rate recommending stocks and a +27.2% average return per recommendation.