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ETFs in Focus on Walt DisneyQ4 Earnings Flop

Shares of The Walt Disney Company DIS lost more than 3.6% in after-hours trading on Nov 9, immediately after it reported an earnings and revenue miss in fourth-quarter fiscal 2017. However, it has pared some of its losses since then. The company reported a year-over-year decrease of 2.8% in net quarterly revenues.


Fiscal Q4 Performance


Walt Disney reported non-GAAP earnings per share of $1.07, missing the Zacks Consensus Estimate of $1.12 and the year-ago earnings of $1.10. Revenues of $12.78 billion also missed the consensus mark of $13.15 billion.


Segmental Performance


Media Networks reported operating revenues of $5.5 billion, down from $5.7 billion a year ago. Moreover, segment income amounted to $1.5 billion, down from $1.7 billion a year ago. Per the company’s news release, results were affected by lower advertising revenues and contractual rate increases for sports programming. Moreover, wider losses from equity investments in BAMTech LLC and Hulu LLC weighed on the segment’s performance.


Parks and Resorts reported operating revenues of $4.7 billion, up from $4.4 billion a year ago. Moreover, segmental income amounted to $746 million, up from $699 million a year ago. Increased guest attendance and spending both domestically and internationally led to the upside. However, hurricanes impacted the segment’s performance domestically.


Studio Entertainment reported operating revenues of $2.034 billion, down from $2.062 billion a year ago. Moreover, segment income amounted to $218 million, down from $381 million a year ago. Stronger performance of the Star Wars franchise in the prior year explains the underperformance in this quarter.


Consumer Products & Interactive Media reported operating revenues of $1.2 billion, down from $1.3 billion a year ago. Moreover, segmental income amounted to $373 million, down from $424 million a year ago. Similar to the Studio Entertainment segment, a stronger performance of the Star Wars franchise in the prior year justifies the declines in the fourth quarter.


In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to Walt Disney.


Consumer Discretionary Select Sector SPDR Fund XLY


This fund seeks to provide exposure to the Consumer Discretionary industry. It has AUM of $11.6 billion and charges a fee of 14 basis points a year. The fund has 6.1% exposure to Walt Disney (as of Nov 9). The fund returned 20.0% in a year and 13.1% in the year-to-date time frame (as of Nov 9). It currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.


Vanguard Consumer Discretionary ETF VCR


This fund has AUM of $2.2 billion and is a relatively cheap bet to play the consumer discretionary sector, as it charges a fee of 10 basis points a year. The fund has a 4.8% exposure to Walt Disney (as of Sep 30). The fund returned 20.8% in a year and 13.0% in the year-to-date time frame (as of Nov 9). It currently has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 ETFs to Soar After Solid Q3 GDP Data).


Fidelity MSCI Consumer Discretionary Index ETF FDIS


This fund has AUM of $294.1 million and is one of the cheapest bets to play the consumer discretionary sector, as it charges a fee of just 8 basis points a year. The fund has a 4.9% exposure to Walt Disney (as of Nov 8). The fund returned 21.0% in a year and 13.2% in the year-to-date time frame (as of Nov 9). It currently has a Zacks ETF Rank #3 with a Medium risk outlook.


Below is a chart comparing the year-to-date performance of the funds and Walt Disney.


 
Source: Google Finance


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Walt Disney Company (The) (DIS): Free Stock Analysis Report
 
SPDR-CONS DISCR (XLY): ETF Research Reports
 
VIPERS-CONS DIS (VCR): ETF Research Reports
 
FID-CON DIS (FDIS): ETF Research Reports
 
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