I will preface by saying I have a few updates to make. I haven’t written here in a few weeks. With that said, I just made three purchases yesterday! In this post I’ll cover why I added more Disney. The others will be in a separate post.
Disney reported 2nd quarter numbers on May 8th. The company reported earnings of $1.50, up 15% from the $1.30 earned in 2016. So is Disney a buy after earnings?
For the first half of the fiscal year, earnings of $3.05 were reported versus the $3.04 earned in the first half of 2016. This represents virtually no growth seen in earnings. Excluding certain items, earnings were up 2% for the six months.
CEO Bob Iger commented on the strength of the studio and parks divisions. He iterated focusing on long term shareholder value. Even the much maligned media networks segment grew revenue 3% year over year. That is the largest revenue segment with nearly $6B in revenue for the quarter though operating income dropped 3%.
ESPN has been the cause of the stock woes over the past 18 months. The decrease in operating income was due to a decrease of revenues at ESPN which was partially offset by increases at the Disney Channels and Freeform.
ESPN saw higher programming costs which was partially offset by affiliate and advertising revenue growth. I think the ESPN situation is overblown, the company is moving that content to many of the streaming services. These headwinds will blow over, in the meantime I want to see if the share price pulls back to an unreasonable level.