The Walt Disney Company reported fiscal third-quarter results on Wednesday, beating analyst expectations for adjusted earnings per share and announcing an increase in its share repurchase target to $9 billion for the current fiscal year. The company attributed growth in earnings and engagement to the success of “Toy Story 5”, which drove revenue across the box office, merchandise sales, and theme park attendance.
Financial Performance and Share Buybacks
Disney’s adjusted net income (non-GAAP) rose 23% to more than $3.8 billion, resulting in adjusted earnings per share (EPS) of $2.06. This figure exceeded the $1.86 per share forecast by analysts, according to The Motley Fool. Total revenue for the period grew 7% year over year to $25.2 billion, though this slightly missed the consensus analyst estimate of $25.4 billion.
To fund its increased buyback goal, Disney announced it will sell its 50% stake in A+E Global Media to co-owner Hearst Corporation for an estimated $1.2 billion in cash. This move raises the fiscal 2026 share repurchase target to $9 billion, up from an $8 billion goal set in the previous quarter and a $7 billion goal the quarter before that. For comparison, the company spent $3.5 billion on buybacks in fiscal 2025.
Segment Growth and the “One Disney” Strategy
Revenue performance across major segments included:
- Parks and Experiences: Revenue rose 10% to nearly $10 billion. This growth was supported by a 4% increase in global theme park attendance and a 3% increase at domestic parks. Operating income for the segment grew 20% to $3 billion, aided by a $100 million tariff refund following a Supreme Court ruling that struck down certain global tariffs as illegal.
- Entertainment: Revenue increased 6% to $11.3 billion. Subscription and affiliate fees grew 12% to over $7.5 billion, with Disney+ and Hulu streaming services specifically seeing a 15% increase in subscription fees. Segment operating income rose 64% to nearly $1.7 billion.
- Sports: Revenue grew 4% to $4.5 billion. However, the sports segment experienced a 17% drop in operating profit due to a network-carriage dispute and early-round sweeps in the NBA playoffs.
Future Guidance and Strategic Shifts
Disney maintained its full-year 2026 earnings projections, targeting adjusted EPS growth of 12% or 16% over the previous year, depending on the inclusion of an extra reporting week. The company also reaffirmed a forecast for double-digit percentage improvement in profitability for 2027.
Looking ahead, Disney expects fourth-quarter segment operating income of $4.9 billion, citing continued healthy growth in its parks group. However, the company noted that the weak box office performance of the live-action “Moana” adaptation would impact the entertainment segment’s results.
The company is also implementing structural and operational changes, including:
- Organizational Realignment: Starting in the next fiscal year, Disney will move much of its consumer-products business from the experiences segment to the entertainment segment to align products more closely with the studios that create the intellectual property.
- Cost Reduction: Management stated it is “mid-stream” through efforts to reduce costs related to labor as well as selling, general, and administrative expenses.
- Digital Evolution: D’Amaro stated during an investor call that Disney+ will continue to evolve by adding merchandise, games, and other experiences.
Keep reading
