Baby Yoda Is Cute, But Disney Parks Profits Are Beautiful
Every now and then, I like to take a deep dive into the world of Disney investing. I don’t own Disney stock, but I think about it often. OFTEN. Especially when I am in the Disney Parks.
And I’m not alone…
Walt Disney has demolished a pair of key box office records this year—and will extend its lead when another Star Wars film hits theaters later this month. Meanwhile, its streaming service, Disney +, is off to a fast start. But even more remarkable for stock investors is what’s happening to the earnings power of Disney’s parks.
But didn’t everyone tell us that streaming is the future? And what about those box office records?
[Looking] forward several years, Wall Street expects income for the parks unit to approach $10 billion by Disney’s fiscal year through September 2024, easily eclipsing media networks. By then, streaming could be a significant contributor: Analysts see operating income for the division multiplying to nearly $2.5 billion that year from a small base the year before, versus $3.9 billion for the studios, up about 3%.
In other words, for Disney, streaming is an earnings driver of the future, but parks are where the earnings growth is right now.
That puts the spotlight on Bob Chapek, who runs the parks division. In a conversation with Barron’s earlier this year, he talked about theme parks as a complement to Disney’s rising dominance in screened entertainment—a place where parents can turn off the screens for real-world fun with familiar characters and stories.