Shares of the Walt Disney Co. (DIS) rose more than 2% in after-hours trading on Tuesday following the media company's top- and bottom-line first quarter beat.
Disney reported revenue of $15.3 billion, topping analyst estimates of $15.05 billion, on adjusted earnings of $1.84 per share, better than the $1.55 analysts expected.
Media networks revenue and operating income both rose 7%. Disney reported media network revenue of $5.9 billion.
"After a solid first quarter, with diluted EPS of $1.86, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service," said Robert Iger, Disney's Chairman and Chief Executive Officer. "Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space."
Disney is an Action Alerts PLUS holding. After the results, the AAP team assessed the numbers this way: "We believe the quarter to be largely positive, despite the segment revenue misses thanks to improved operating efficiencies leading to better than expected operating margins across the board."
Disney's most valuable asset is its catalog of intellectual property. However, the company's direct to consumer (DTC) plans are still cloudy, which may be cause for concern after former ABC Entertainment President Channing Dungey left the company to join DTC rival Netflix Inc. (NFLX) .
"While the direct to consumer push is certainly going to require an added level of investment that could pressure the stock, or at least cap upside in the near-term, we believe the longer-term opportunity to be highly attractive," AAP senior researcher Zev Fima told TheStreet ahead of the report. "Given the company's deep intellectual property portfolio, we think a streaming platform from Disney could be a formidable competitor to the likes of Netflix and others in the space."