Once Again, Parks Are The Happiest Places In Disney's Quarter

Walt Disney Co (NYSE: DIS) reported Thursday its fiscal fourth-quarter earnings in which all segments showed signs of weakness except for its Parks unit.

The Analyst

UBS analyst John Hodulik.

The Rating

Hodulik maintains a Buy rating on Disney's stock with an unchanged $122 price target.

The Thesis

Disney's Theme Parks segment was impacted by Hurricane Irma yet still reported revenue of $746 million, which exceeded the Street's estimate of $735 million, Hodulik said in a note. The company also said it will increase its capital expenditures in the Theme Parks unit by $1 billion, which may be a prudent investment since Theme Parks was the only segment that didn't come in "light" in the quarter.

Aside from Theme Parks, the Media Net segment reported an operating income of $1.475 billion, which was short of the $1.58 billion the Street was expecting and the $1.516 billion the analyst was modeling. But there were a few encouraging signs, including an improvement in subscriber declines to -3 percent from -3.5 percent in the prior quarter. Affiliate revenue also accelerated from 2 percent in the prior quarter to 4 percent.

Price Action

Hodulik said Disney's stock is trading at 16.2x CY18E P/E, which is a premium compared to a 10-year average of 15.4x. The stock is also trading at discount of around 10 percent to the S&P 500 index versus a historical premium of 10 percent.

Shares of Disney were trading higher by more than 2 percent at $105.49 Friday.

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