Disney (DIS) Q1 Earnings: Can Studio Segment Create Magic?

The Walt Disney Company (NYSE:DIS) , which is scheduled to report first-quarter fiscal 2018 earnings on Feb 6, 2018, will be under investors’ purview. Investors will not just look at the top and bottom-line performance of this media bellwether but will also closely observe its key segments performance to ascertain whether the strategic initiatives taken by the company have yielded results or not.

Let’s focus on the company’s Studio Segment and find out how it is going to perform. Disney, which struck gold with almost every release in fiscal 2016, has somewhat disappointed in 2017 as the year has been dull for the movie industry. During the first, second, third and fourth quarter of fiscal 2017, the segment witnessed a decline of 17%, 1%, 16% and 21%, respectively. In fiscal 2017, the Studio Entertainment garnered revenues of $8,379 million, down 11% year over year as the prior-year results benefited from robust performance of movies released in 2016.

However, analysts believe that the segment is likely to be back on track in fiscal 2018 due to impressive line-up of movies. The company’s latest flick, Star Wars: The Last Jedi has performed well at the box office. Moreover, Thor: Ragnarok and Coco were also released during the quarter under review and did solid business at the box office. So far, Star Wars: The Last Jedi, Thor: Ragnarok and Coco have garnered above $1.3 billion, $850 million and $680 million, respectively. Analysts polled by Zacks expect Studio segment revenues of $2,767 million, up 9.8% year over year.

Moreover, the company’s top and bottom-lines are expected to increase in the first quarter driven by robust performance of Parks & Resorts and Studio entertainment segments. The Zacks Consensus Estimate of earnings for first-quarter fiscal 2018 is currently pegged at $1.60. We observed that the consensus estimate has increased by a penny in the past 30 days, which reflects a year-over-year increase of nearly 3.2%. (Read more: Disney Q1 Earnings: Parks & Resorts, Studio Holds Key)

Walt Disney Company (The) Price, Consensus and EPS Surprise

Summing Up

We believe that the year ahead will be fruitful for Disney. The studio is all set to continue with its success story beyond Star Wars, Zootopia and Beauty and the Beast as it boasts of an impressive lineup of big budget movies. In 2018, the company is expected to release Black Panther, A Wrinkle in Time, Avengers: Infinity War, The Incredibles 2 and Ant-Man and the Wasp. Disney currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Watch for Earnings

Investors following the media stocks may watch out for earnings of Time Warner Inc. (NYSE:TWX) , Viacom, Inc. (NASDAQ:VIAB) and Twenty-First Century Fox, Inc. (NASDAQ:FOXA) , which are anticipated to report quarterly results on Feb 1, 8 and 7, respectively. You can also uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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