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Disney's Box Office Results Boost Studio Entertainment Unit

The Walt Disney Company DIS has hit a milestone at the global box office yet again by touching $7 billion in year-to-date ticket sales.

Disney Animation’s flick Ralph Breaks the Internet reached the zenith of the top 10 weekend domestic box office estimates, pulling the company through the $7 billion mark.

This comes a couple of years after the company had broken the $6.9 billion record set by Comcast’s CMCSA Universal Studios, with a string of top-grossing films like Rogue One, Finding Dory, Captain America and Zootopia.

Marvel’s Avengers: Infinity War, Black Panther and Ant-Man and the Wasp, Pixar’s Incredibles 2 and Lucasfilm’s Solo: A Star Wars Story were among the other revenue pulling films for Disney this year.

Moreover, with Mary Poppins Returns releasing on Dec 19, Disney might outpace the domestic gross of $3 billion and hit another industry record.

Focus on Studio Entertainment

Disney’s Studio Entertainment segment, which produces the animated and live-action motion pictures, direct-to-video programming, musical recordings and live stage plays, is a significant revenue generator.

A part of Disney’s tradition of producing top-grossing animated and superhero films can be attributed to the strategic acquisitions it makes from time to time. It has spent about $15.4 billion in acquiring Pixar, Marvel Comics and Lucasfilm since 2006. These assets have delivered most of the top-grossing films this year.

These acquisitions have proven to be profitable for the company, which has generated $10 billion in revenues only from its Studio Entertainment segment at the end of fiscal 2018, increasing 19% year over year.

The Walt Disney Company Revenue (TTM)

The Walt Disney Company Revenue (TTM) | The Walt Disney Company Quote

Moreover, in the final quarter of fiscal 2018, the Studio Entertainment segment’s operating income surged 173.4% to $596 million.

Rise in operating income was driven by strong growth in theatrical, TV/SVOD and home entertainment distribution and lower film cost impairments.

The interesting lineup of movies next year, including Captain Marvel, Dumbo, Aladdin, The Lion King, Toy Story 4 and the next Avengers film, is expected to deliver yet another year of massive hits and impressive segmental performance.

Zacks Rank & Stocks to Consider

Disney currently has a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the broader Consumer Discretionary sector are PCM, Inc. PCMI, and Churchill Downs, Incorporated CHDN, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for PCMI and Churchill Downs is projected to be 20% each.

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Churchill Downs, Incorporated (CHDN) : Free Stock Analysis Report
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