The Walt Disney Company (NYSE: DIS) reported its second fiscal quarter earnings for 2016. The results missed estimates and Disney stocks fell by more than 6% to $100.15 per share in after-hours trading on Tuesday.
According to the report released on Tuesday, the revenue in second quarter was $12.97 billion, lower than the $13.2 billion estimates. Diluted earnings per share (EPS) increased 6% from $1.23 to $1.30, missing $1.40 estimate, and EPS for the six months increased 20%.
Due to an increase at ESPN, cable Networks revenues in the second quarter fell 2% to $3.96 billion and operating income increased 12% to $2.02 billion, partially offset by a decrease in advertising revenue due to subscriber losses. Lower programming costs and higher affiliate revenues contributed to ESPN’s increase.
Parks and Resorts, the second-largest revenue contributor at Disney, increased 4% to $3.9 billion in revenues and increased 10% to $624 million in segment operating income in the second quarter.Studio Entertainment revenues also increased 22% to $2.1 billion and segment operating income increased 27% to $542 million, which made Studio Entertainment the best-performing segment at Disney.
“We’re very pleased with our overall results in Q2, which marks our 11th consecutive quarter of double-digit growth in adjusted EPS”, said Robert A. Iger, chairman and chief executive officer of the Walt Disney Company. He also mentioned that Shanghai Disney Resort will open next month, which will be the first Disney theme park in Mainland China.
Although Disney’s second quarter earnings were not bad, the stock tumbled because the results disappointed investors.
"We see no signs that the businesses are operating poorly, or are facing new or heightened threats," Bernstein analyst Todd Juenger said. " Forecasts were just over-exuberant, especially on consumer products, and need to come down. This is cold comfort to Disney shareholders because stocks are valued on estimates. When estimates come down, stocks usually follow."