Animation Rivalry Strikes Again… Who Will Come Out On Top?

Walt Disney Co. (DIS) and DreamWorks Animation SKG Inc. (DWA) are two players at the top of their field in animation, each having their own renowned success stories and producing the highest quality movies. Walt Disney reports its FQ3 '15 results after the closing bell on August 4th. Currently, the Estimize community, consisting of 81 analysts, is predicting an EPS figure of $1.45 compared to Wall Street consensus of $1.39. Year-over-year EPS growth for the last 7 our of 8 quarters has consistently remained in the double digits. Estimize is also predicting higher revenues of $13.265B relative to Wall Street's $13.169B consensus, up from $12.461B last quarter. For the last 8 quarters, Disney has consistently beaten the Wall Street consensus. On the other hand, DreamWorks Animation also reports its earnings, FQ2'15, at 4pm on Tuesday. Wall Street analysts predict an EPS figure of -$0.28 and forecast revenues of $175.86M. The irony between these competitors is that they actually have been intertwined forever, as Jeffrey Katzenberg left Disney to found DreamWorks after failing to be promoted to CEO of Disney.  

Disney's revenue growth has outpaced the industry average of 6.8%, and YoY growth last quarter was up 7.0%. This revenue growth has consequently boosted the company's EPS. EPS increased by 13.9% last quarter compared to the year prior. For the last two years, EPS has been positive, and this growth is expected to continue for the upcoming quarter. Over the last fiscal year, the company raised its bottom line guidance from $3.38 to $4.25. Over the next fiscal year, earnings are expected to continue to increase to $5.05 from $4.25. One factor that will contribute to the growth this quarter is the inevitable high summer traffic to the theme parks. Moreover, in the pipeline, the new Star Wars movie as well as the new $5.5B 1,000 acre Disney theme park in Shanghai are expected to increase future earnings.

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