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Disney's Pricey Magic Kingdom Delights Kids, Shareholders Alike

NEW YORK (TheStreet) -- Walt Disney's (DIS) theme parks look all set to boost shareholder returns.

The company has recently increased the ticket price of its iconic theme park. The parks and resorts segment is not nearly as profitable as some of Disney's other operations. With ongoing development and price increases, however, the unit could become a lot more attractive.

Disney shares have increased by 36% in the last six months to $83.34, easily outperforming Comcast (CMCSA), which is up 23% and the broader S&P 500 ETF (SPY), which is up 13% in the same period.

Despite the rally, Wall Street is still bullish on the stock. Its shares could continue to go higher. TheStreet has reiterated a buy rating on the stock, while RBC Capital has raised its price target to $89.

Walt Disney has increased the single day admission price to its Magic Kingdom theme park in Florida -- the most visited theme park in the world -- by more than 4% to $99. This is the second time in eight months that the company has increased the ticket price. Meanwhile, the price of other theme parks at Disney World, including Epcot, Animal Kingdom and Hollywood Studios, are also up by $4 to $94.

In the previous fiscal year ending September 2013, Disney's revenue from its parks and resort segment rose 9% to $14.1 billion while operating income climbed 17% to $2.2 billion.

The segment is the second-biggest contributor to Disney's revenues and earnings, behind media networks. The unit is responsible for more than 31% of the company's total revenues and more than 20% of its total operating income.

The segment, however, is not the most profitable. In the previous fiscal year, its operating margin was 15.8%, which is considerably lower than the 33.5% margin for media networks or the 31.3% margin for consumer products.

The news of the increase in prices at parks and resorts comes just after company reported another earnings beat in its quarterly results. For the first quarter of 2014, Disney's net income climbed 33.1% year-over-year to $1.84 billion, or $1.03 a share. Revenue increased 9% from last year to $12.31 billion. Adjusted earnings came in at $1.04 a share, better than the consensus estimate of 92 cents per share, according to data compiled by Thomson Reuters.

Disney reported an across-the-board increase in revenues in all segments, particularly ESPN and kids' movies. The sports network ESPN continues to drive the company's earnings growth. In the previous quarter, the media network segment, which includes ESPN, witnessed a 20% increase in operating income from last year to $1.5 billion The movie studios segment witnessed a 75% increase in operating income to $409 million, as it rode on the success of Frozen and Thor: The Dark World.

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