Nov. 07–The Walt Disney Co. reports fiscal year-end earnings this afternoon and analysts are once again expecting the company’s theme parks and resorts to be a primary profit driver — though not quite the catalyst they were earlier in the year.
Analysts at Goldman Sachs, for instance, estimate quarterly that operating profit grew 8 percent from a year ago at Walt Disney Parks and Resorts on revenue that rose 7 percent. Disney’s vacation businesses churned out operating income growth of 17 percent and revenue growth of 9 percent during the first nine months of the fiscal year.
The growth rate is slowing in part because some of the company’s most successful recent theme-park investments — particularly a pair of new cruise ships and “Cars Land” at Disney California Adventure in Anaheim, Calf. — have now been open for more than a year and are therefore facing more difficult year-over-year comparisons.
In a research note, Goldman Sachs predicted that Disney’s theme-park profit margins are still being weighed down by capital spending on a pair of other major projects that have yet to begin generating revenue — the billion-dollar MyMagic–program at Walt Disney World and Shanghai Disneyland in China, which is expected to open in 2015.
Analysts will be looking for a progress report on MyMagic– the many-tentacled technology initiative that includes RFID-equipped bracelets and an advance reservation system for rides — as Disney executives have said they expect to be about fully launched by the end of this year. Disney late last month turned oversight of the project over from the development team to the operations team at Disney World.
Disney executives have also said they hope to adapt some of the MyMagic–systems to their other resorts around the world, though they have not yet provided any details about how they will do.
Industry watchers are generally upbeat about the core strength of Disney’s domestic parks business, which are often seen as a bellwether for U.S. consumer confidence.
“Ongoing healthy attendance and margin trends at the parks [are] expected,” JP Morgan analyst Alexia Quadrani wrote in an Oct. 11 research note. “After setting attendance records at both Disneyland and Disney World in FQ3 [the fiscal third quarter], expect strong trends to have continued through the summer and should drive a nice margin lift….”
Disney will post earnings shortly after the markets close at 4 p.m. Company executives will then hold a conference call to discuss the results with analysts beginning at 5 p.m.
Check back for updates beginning at about 4:30 p.m. or follow Sentinel business reporter Jason Garcia on Twitter for continuing updates. His Twitter feed is @Jason_Garcia
