Here Is What We Expect From Disney’s Q3 Earnings
Disney (NYSE:DIS) will report its Q3 earnings on August 09, 2016. (Fiscal years end with September.) We expect the company to report strong growth due to successful box office collections and strong DVD sales this quarter. In addition, we believe opening of Shanghai theme park could boost Q3 International theme park revenues, while the shifting of Easter to previous quarter this year could have affected U.S. theme park revenues. On the other hand, strong upfront ad sales, which increased 20% over the prior year, likely benefitted the Disney channel’s revenues. [1]
Our price estimate for Disney stands at $112, implying more than 15% premium to the market.
Disney Studios Likely Had A Strong Quarter
- We estimate that Disney Studios account for more than 15% of the company’s value.
- DVD sales of Star Wars: The Force Awakens have been strong. It outsold all 19 other Blue-ray Disc and DVD releases in the Top 20 as per NPD data. [2]
- We expect 2016 to be a positive year for Disney Studios with 5% revenue growth, which is close to the average of the last five years.
- This will be driven by the launch of the next series of Star Wars during the latter part of the year. The franchise’s previous movie, Star Wars: The Force Awakens, was the highest grossing movie of all time at the U.S. box office.
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Theme Parks May Surprise
- In June this year, Disney opened the doors to its new $5.5 billion theme park in Shanghai. With one million plus attendees in the first month, we could expect some meaningful growth in the coming quarters.
- We expect International theme parks revenues to grow by 20% this year, which is a significant increase over 2015, with much of it coming from Disney’s new Shanghai theme park.
- However, the valuation significance continues to remain low as we estimate that international theme parks account for just about 5% of Disney’s valuation.
- Also, the U.S. theme parks may display a decline this quarter due to shifting of Easter to Q2 this year.
Have more questions about Time Warner? See the links below.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Time Warner
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Notes:- Disney Sees 20% Gain in Volume for Kids’ Upfront, Variety, June 30, 2016 [↩]
- Star Wars’ Regains Top Spot on Disc Sales Chart ,Variety, May 13,2016 [↩]