On May 6, before market open, the Walt Disney Company DIS reported second-quarter fiscal 2026 adjusted earnings of $1.57 per share, which rose 8% year over year and beat the Zacks Consensus Estimate by 5.4%. Shares of the entertainment giant rose 7.54% on May 6.
Revenues of $25.17 billion increased 7% year over year, topping the consensus mark by 0.55%. The company stated that stronger-than-expected revenue growth was the primary driver of the outperformance.
Net income was $2.25 billion, or $1.27 per share, down from $3.28 billion, or $1.81 per share a year earlier, representing a 30% decline in reported EPS. Disney’s total segment operating income increased 4% year over year to $4.6 billion in the reported quarter compared with $4.4 billion in the year-ago quarter.
Disney's Segment Breakdown
Entertainment
Entertainment revenues, which constitute about 46.5% of total revenues, increased 10% year over year to $11.72 billion. The entertainment segment's operating income grew 6% to $1.34 billion at an operating margin of 11.4%.
Subscription Video on Demand (SVOD) revenues increased 13% year over year to $5.49 billion. SVOD operating income surged 88% to $582 million, while other entertainment businesses generated $754 million, down 20% year over year. Content Sales revenues increased 8% year over year to $1.73 billion. Subscription and affiliate fees increased 14% year over year to $7.8 billion, with the Fubo transaction contributing approximately 500 basis points. Advertising revenues grew 5% year over year to $1.67 billion.
Experiences
Experiences revenues, which constitute about 37.7% of total revenues, increased 7% year over year to $9.49 billion. The segment’s operating income was $2.62 billion, up 5% year over year.
Domestic Parks and Experiences revenues were $6.92 billion, up 6% year over year, while its operating income was $1.91 billion, up 5% year over year, driven by higher guest spending and an increase in passenger cruise days, reflecting the launches of the Disney Destiny in November 2025 and the Disney Adventure in March 2026.
International revenues increased 11% year over year to $1.6 billion in the reported quarter, while its operating income was $227 million, up 1% year over year. Consumer Products' operating income increased 8% year over year to $479 million.
Sports
Sports revenues, which constitute around 18.3% of total revenues, rose 2% year over year to $4.61 billion, while the segment's operating income was $652 million, down 5% year over year.
Subscription and affiliate fees rose 6% year over year to $3.25 billion, while advertising revenues declined 2% year over year to $1.13 billion due to fewer impressions, the absence of UFC pay-per-view revenues and fewer NBA games relative to the prior-year quarter.
Disney’s Outlook
For the third quarter of fiscal 2026, DIS expects total segment operating income of approximately $5.3 billion. DIS targets an annual SVOD operating margin of at least 10% and Sports segment operating income growth of mid-single digits.
For fiscal 2027, DIS continues to expect double-digit adjusted EPS growth.
Disney’s Stock Under the Microscope
Walt Disney currently has an average brokerage recommendation (ABR) of 1.53 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 31 brokerage firms. The current ABR compares to an ABR of 1.53 a month ago, based on 31 recommendations.
Of the 31 recommendations deriving the current ABR, 21 are Strong Buy and five are Buy. Strong Buy and Buy, respectively, account for 67.74% and 16.13% of all recommendations. A month ago, Strong Buy made up 67.74%, while Buy represented 16.13%, indicating that the majority of the analysts remain bullish.
Based on short-term price targets offered by 28 analysts, the average price target for DIS comes to $131.46. The average price target represents an increase of 21.65% from the last closing price of $108.06 (as of market close on May 6). The company has a Zacks Rank #3 (Hold) and has a Value Score of C.
Beyond Earnings
According to Geetha Ranganathan, senior media analyst at Bloomberg Intelligence, as quoted on Yahoo Finance, Disney’s next big catalyst could be Josh D’Amaro’s planned “super app.” Per Ranganathan, Disney appears to be transforming Disney+ beyond a streaming platform into a centralized “super app,” offering consumers a one-stop destination for content, theme park tickets, merchandise, gaming and other Disney experiences.
ETFs to Consider
Below, we focus on ETFs that have exposure to Disney.
Motley Fool Value Factor ETF MFVL has an exposure of 4.82% to Disney.
Invesco S&P 500 Equal Weight Communication Services ETF RSPC has an exposure of 4.61% to Disney.
First Trust S-Network Streaming and Gaming ETF BNGE has an exposure of 4.53% to Disney.
State Street Communication Services Select Sector SPDR ETF XLC has an exposure of 4.51% to Disney.
iShares Global Comm Services ETF IXP has an exposure of 4.44% to Disney.
Diamond Hill Large Cap Concentrated ETF DHLX has an exposure of 4.40% to Disney.
Vanguard Communication Services ETF VOX has an exposure of 4.04% to Disney.
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The Walt Disney Company (DIS): Free Stock Analysis Report
Vanguard Communication Services Index Fund ETF Shares (VOX): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
State Street Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
First Trust S-Network Streaming & Gaming ETF (BNGE): ETF Research Reports
Invesco S&P 500 Equal Weight Communication Services ETF (RSPC): ETF Research Reports
Motley Fool Value Factor ETF (MFVL): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).