Key Takeaways

  • Disney's Parks, Experiences and Products revenue beat analysts' estimates, more than quadrupling YOY.
  • The Parks, Experiences and Products segment has been adversely impacted by the COVID-19 pandemic, but has begun to recover amid vaccine rollouts and the relaxation of restrictions.
  • The segment returned to profitability for the first time since the pandemic began.
Disney Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat $0.80 $0.53
Revenue Beat $17.0B $16.8B
Parks, Experiences and Products Revenue Beat $4.3B $4.0B

Source: Predictions based on analysts' consensus from Visible Alpha

Disney (DIS) Financial Results: Analysis

The Walt Disney Company (DIS) reported Q3 FY 2021 earnings results that smashed analysts' expectations. Adjusted earnings per share (EPS) came in well above analyst forecasts, up tenfold from the year-ago quarter's pandemic-depressed lows. Disney's revenue also exceeded consensus estimates, rising 44.5% year over year (YOY). Revenue for the company's Parks, Experiences and Products segment also beat expectations. The company's shares jumped more than 5% in after-hours trading. Over the past year, Disney's shares have provided a total return of 36.1%, above the S&P 500's total return of 32.0%.

DIS Parks, Experiences and Products Revenue

Revenue for Disney's Parks, Experiences and Products segment rose 307.6% compared to the year-ago quarter, ending a streak of five straight quarters of declining revenue. The segment is comprised of Disney's theme parks, resorts, cruise ships, and vacation clubs. It is tied especially closely to the spending power of consumers in the U.S. and around the world.

Of all Disney's business segments, the Parks, Experiences and Products segment has been the most severely impacted by the COVID-19 pandemic and related government-imposed measures to limit the spread of the virus. In FY (fiscal year) 2019, the year before the pandemic, the segment accounted for 38.5% of the company's annual revenue. In FY 2020, it accounted for 26.1%.

But the segment has begun to recover from the worst of the pandemic, thanks to vaccine rollouts and the relaxation of restrictions that have allowed Disney to increase capacity limits at its theme parks. Parks, Experiences and Products returned to profitability for the first time since the start of the pandemic, reporting an operating income of $356 million in Q3 FY 2021 compared to an operating loss of $1.9 billion in the year-ago quarter.

The recovery, however, is highly uncertain as the faster-spreading Delta variant of the coronavirus is raising concerns. The spread of the Delta variant has already prompted Disney to reimpose a mask mandate at its U.S. theme parks. Disney said that it will continue to incur additional costs related to government regulations and the implementation of safety measures for employees, talent, and guests.

Disney's next earnings report (for Q4 FY 2021) is estimated to be released on Nov. 10, 2021.