The Walt Disney Company (DIS - Analyst Report) ended fiscal 2014 on a high note as movie business and Parks and Resorts continued with their fabulous run. The company’s fourth-quarter adjusted earnings per share came in at 89 cents, up 16% year over year and a penny ahead of the Zacks Consensus Estimate.

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Including one-time items, earnings came in at 86 cents, up 12%.

Frozen, released last year, has proved to be a phenomenal success. After raking in over $1.2 billion at the worldwide box office, the movie’s merchandise is gaining tremendous popularity with dolls and dresses, modeled on the protagonist, becoming a must have this season. Adding to it is the runaway success of Marvel’sGuardians of the Galaxy, Captain America 2 and Maleficent, making it one of the most profitable fiscal for Disney. Domestic Parks and Resorts have been drawing huge footfall.

Fiscal 2015 will see two major releases namely Avengers: Age of Ultron and Ant-Man. Moreover, with an impressive film slate running up to 2019, including films from Marvel along with Toy Story 4 (2017) from Pixar, and Lucasfilms’ much awaited Stars Wars: The Force Awakens (Dec 2015), we expect Disney studio to generate record revenues in the future.

However, programming costs on account of NFL continue to escalate at ESPN, running down the growth in affiliate and advertising revenues at the company’s biggest segment, Media Networks. As a result, shares were down 2.4% in the after market trading.

For the fiscal, adjusted earnings per share came in at $4.32, beating the Zacks Consensus Estimate of $4.31 while rising 27% year over year.

Revenues came in at $12,389 million, up 7% year over year and way ahead of the Zacks Consensus Estimate of $12,357 million. Full year revenues grew 8% to $48,813 million and beat the Zacks Consensus Estimate of $48,740 million.  

Total segment operating income increased nearly 12% to $2,775 million, based on strong performance across all divisions, particularly Studio Entertainment, and Parks and Resorts segments.

Segment Details

Media Networks revenues increased 5% year over year to $5,217 million during the quarter, attributable to 6% rise in Cable Networks revenues to $3,776 million and 5% rise in Broadcasting revenues to $1,441 million.

However, the segment’s operating income remained almost flat at $1,437 million owing to a decrease of 1% in Cable Networks operating income to $1,274 million, which ran down a 3% rise in Broadcasting operating income to $163 million.

Parks and Resorts revenues rose 7% to $3,960 million, while the segment’s operating income increased 20% to $687 million. Domestic operations were robust but Disneyland Paris witnessed reduced footfall.

In the quarter, per capita spending in the Parks grew 5% on increased ticket prices and food and beverage spending. Management stated that so far in the first quarter of fiscal 2015, domestic resort reservations have gone up 11% year over year, while booking rates are up 3%.

Studio Entertainment revenues rose 18% to $1,778 million, while operating income of $254 million increased over twofold. The stupendous success ofGuardians against year-over-year comparisons with The Lone Ranger that bombed at the box office resulted in a spike in profits. Home entertainment performance of Frozen and Captain America 2 was another positive in the quarter. Disney acquired Marvel studios in 2009. Ever since, Marvel has delivered a string of blockbuster hits for the company.

Consumer Products revenues increased 7% to $1,072 million while segment operating income rose 9% to $379 million, owing to gains from Merchandise Licensing business.

Interactive revenues for the quarter fell 9% to $362 million while operating profit increased 13% to $18 million.  Tsum Tsum continued to perform well in the quarter, although offset by a slight late release of Disney Infinity 2.0.

Other Financial Details

During fiscal 2014, Disney generated free cash flow of $2,042 million, up 17% year over year. The company ended the quarter with cash and cash equivalents of $3,421 million, borrowings of $12,676 million and shareholder’s equity of $44,958 million, excluding non-controlling interest of $3,220 million.

In the reported quarter, Disney bought back 16.4 million shares for approximately $1.4 billion. For the year, 84.4 million shares were brought back for approximately $6.5 billion.

Currently, Disney carries a Zacks Rank #3 (Hold). Apart from Disney, other media companies which reported quarterly results this week include Twenty-First Century Fox, Inc. (FOXA - Analyst Report), CBS Corporation (CBS - Analyst Report) and Lions Gate Entertainment Corp. (LGF - Analyst Report). All the companies topped estimates on the top and bottom lines.

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