Disney Will Continue to Define Entertainment for the Next 100 Years

Disney has defined entertainment for the last 100 years. And it will continue to do so for the next 100 years, according to a comment by CEO Bob Chapek, following the release of the company's first fiscal 2022 quarter results last week.

The iconic company earned $0.63 per share in Q1, 2022 from continuing operations, up from $0.02 in Q1, 2021. Excluding certain non-recurring items, Disney earned $1.06 per share, up from $0.32 last year. This is all thanks to the launch of a new franchise with "Encanto," substantial streaming subscriber growth and gains in the theme park business.

Meanwhile, the end of fiscal Q1, Jan. 1, coincided with the completion of the company's first century that changed the face of the entertainment industry, giving its CEO an additional reason to be optimistic about the company's future.

"We've had a very strong start to the fiscal year, with a significant rise in earnings per share, record revenue and operating income at our domestic parks and resorts, the launch of a new franchise with 'Encanto,' and a significant increase in total subscriptions across our streaming portfolio to 196.4 million, including 11.8 million Disney+ subscribers added in the first quarter," said Chapek. "This marks the final year of The Walt Disney Company's first century, and performance like this coupled with our unmatched collection of assets and platforms, creative capabilities and unique place in the culture give me great confidence we will continue to define entertainment for the next 100 years."

Wall Street liked it, sending the company's shares sharply higher following the release of Q1 financial results.

Disney has been facing several challenges in recent years, like the rise of Netflix, which dominated the streaming entertainment business. As a result, Disney saw its revenues stagnating and earnings eroding while Netflix's soared.

Then came the pandemic, which kept visitors away from movie theaters and its theme parks, further aggravating Disney's financial situation.

But the iconic brand didn't sit around letting Netflix define the pace of an industry it pioneered. A couple of years ago, it launched its video entertainment streaming bundles, which cater to different viewer needs.

While the pandemic was a headwind for the company's theme parks, it was a tailwind of its video streaming business, as shelter in place mandates and lockdowns accelerated the adoption of video entertainment streaming products.

Disney's solid financial performance at the end of 2021 may have come as a surprise to investors and analysts who have written Disney off, but not to Quo Vadis President John Zolidis, a long bull on Disney's shares.

"During the pandemic, investor attention for DIS refocused on the company's streaming initiative, which was experiencing explosive growth in a stay-at-home environment," he said. "When streaming subscriber growth slowed as the economy reopened, investors sold DIS shares, forgetting that parks and other key parts of the business were geared to see increased demand in the post-pandemic world. As a result, the December quarter brought this reopening component of the business back into the spotlight."

Meanwhile, "subscriber growth reaccelerated, as Disney+ sign-ups were motivated by the company's content creation engine and substantial library," he adds.

Zolidis is on the same page with Disney's CEO regarding the strength of the company's brand, properties and distribution channels, which he believes can deliver "impressive growth and shareholder returns."

Editor's note: Panos Mourdoukoutas owns shares of Disney.