Walt Disney shares gained around 2.6% at Wednesday’s market open after the entertainment company reported stronger-than-expected third-quarter earnings.
Although revenue came in slightly below Wall Street forecasts, investors responded positively to Disney’s higher profit, improving business momentum, and increased share repurchase target.
Disney Earnings Beat Wall Street Estimates
Disney reported adjusted earnings of $2.06 per share for the third quarter. This exceeded the analyst forecast of $1.86 by $0.20 per share.
Quarterly revenue reached $25.25 billion, representing a 7% increase from $23.7 billion during the same period last year.
However, the result came in slightly below the consensus estimate of $25.43 billion.
Total segment operating income rose sharply to $5.6 billion. This marked a 21% increase from the $4.6 billion recorded a year earlier.
Higher Buyback Target Supports Disney Stock
Disney shares moved higher as investors focused on the company’s strong profitability and expanded stock buyback programme.
The company raised its fiscal 2026 share repurchase target to at least $9 billion. This was higher than its previous plan.
Disney expects to partly finance the increased buybacks with approximately $1.2 billion generated from the sale of its 50% stake in A+E Global Media to Hearst Corporation.
A larger share repurchase programme can support earnings per share by reducing the number of shares available in the market.
Disney Management Remains Confident
Chief Executive Josh D’Amaro and Chief Financial Officer Hugh Johnston said the strong quarterly results supported Disney’s confidence in its long-term position.
In a letter to shareholders, management also reaffirmed the company’s full-year financial outlook.
The comments suggested that Disney expects its major business divisions to continue delivering growth despite ongoing uncertainty across the media and entertainment industries.
Experiences Segment Drives Growth
Disney’s Experiences division was one of the strongest contributors during the quarter.
Operating income from the segment increased by 20% to $3 billion. The result included a benefit of approximately $100 million from a tariff refund.
The total number of global guests rose by 4%. Attendance at Disney’s domestic theme parks increased by 3%, while spending per visitor climbed by 4%.
These figures indicated continued demand for Disney’s theme parks, resorts, and cruise businesses.
Entertainment Profit Jumps 64%
Disney’s Entertainment segment also delivered a strong performance.
Operating income increased by 64% to $1.7 billion, supported by improving results across the company’s television, film, streaming, and consumer product operations.
The increase helped offset weaker performance in the Sports segment.
Sports operating income declined by 17% to $858 million during the quarter.
Disney Maintains Full-Year Earnings Outlook
Disney maintained its fiscal 2026 forecast for adjusted earnings-per-share growth of approximately 12%, excluding the impact of an additional 53rd week.
When the extra week is included, adjusted EPS growth is expected to reach approximately 16%.
The company also forecast total segment operating income of around $4.9 billion for the fourth quarter.
Looking ahead to fiscal 2027, Disney continues to expect double-digit adjusted earnings growth, excluding the impact of the 53rd week.
Goldman Sachs Highlights Business Momentum
Following the earnings report, Goldman Sachs analyst Michael Ng highlighted signs of improving momentum across several parts of Disney’s business.
The analyst noted that attendance growth at domestic theme parks accelerated to 3% year over year. This exceeded Goldman Sachs’ estimate of 1%.
Global attendance, including theme parks and cruise operations, increased by 4%. The opening of the World of Frozen attraction at Disneyland Paris helped support that growth.
Consumer Products Record Strong Growth
Disney’s Consumer Products division delivered its fastest revenue growth in 20 quarters.
Revenue from the business increased by 7% from the previous year, supported partly by demand for Toy Story merchandise.
Goldman Sachs expects the strength of Disney’s merchandise portfolio to continue supporting the division’s results.
The company benefits from a large collection of recognisable characters and franchises that can generate revenue across films, television, theme parks, toys, and other licensed products.
Disney+ Investment Shows Progress
Disney’s investment in subscription streaming services also appears to be delivering positive results.
Goldman Sachs said Disney plans to triple the number of locally produced Disney+ original series over the next year.
The company is also expected to expand sports integration and introduce further platform improvements.
These investments could help reduce customer cancellations, improve viewer engagement, and increase average revenue per user.
Strong Profits Offset Revenue Shortfall
Disney’s revenue miss was relatively modest compared with the strength of its earnings and operating income.
Investors appeared encouraged by growth in the Experiences and Entertainment divisions, stronger theme park attendance, and management’s confidence in future earnings.
The larger share buyback programme also provided additional support for Disney stock.
However, the decline in Sports operating income remains an area investors may continue to watch in future quarters.
