Disney Q3 operating income jumps 21% as streaming, parks drive growth

Disney Q3 revenue rose 7% to $25.25 billion, with EPS of $2.06, as streaming and parks drove operating income up 21%.

Management guided for fourth-quarter segment operating income of approximately $4.9 billion and reiterated full-year fiscal 2026 adjusted EPS growth of about 12 percent, or roughly 16 percent including an extra fiscal week.

Combined Disney+ and Hulu operating income more than doubled to $712 million from $329 million a year earlier, with revenues up 11 percent to $5.53 billion and operating margin expanding to roughly 13 percent. The Experiences segment generated record fiscal third-quarter revenue of nearly $10 billion, up 10 percent, with global guest counts up 4 percent and per-capita spending at domestic parks rising 4 percent. Entertainment segment operating income jumped 64 percent to $1.68 billion, aided by Toy Story 5's box-office run past $1 billion globally.

The company raised its fiscal 2026 share-repurchase target to at least $9 billion from $8 billion, aided by proceeds from the divestiture of its 50 percent stake in A+E Global Media. Disney also struck a new content partnership with TikTok, set to pilot in the United States in the coming months before expanding to other markets in early 2027.

The results contrast with mixed performance at peers. Comcast's NBCUniversal parks reported softer attendance last quarter, with executives citing weaker consumer sentiment and higher travel costs, while Netflix remains the largest global subscription video platform by revenue and profitability. Disney's streaming operating margin of 13 percent trails Netflix's 33 percent, and the live-action remake of Moana came in below expectations.

Despite the strong quarter, Disney shares trade at roughly 16 times this fiscal year's consensus earnings estimate, below the historical forward P/E of about 20. The discount reflects long-term declines in cable subscribership weighing on TV networks and content costs pressuring streaming margins. New CEO Josh D'Amaro, who took over in March, faces the task of proving the strategy can sustain growth.

Disney continues to advance its capital-light Abu Dhabi resort with partner Miral, its seventh global theme-park destination, alongside a multi-ship cruise expansion and new attractions planned across Hong Kong, Tokyo and Paris parks through 2027. The cruise business has added two new ships — Disney Destiny and Disney Adventure — during the past year. Toy Story 5 is expected to arrive on Disney+ by the end of 2026, with deeper Hulu integration including live television and add-ons in the Disney+ app targeted for the same timeframe.

The guidance raise points to management's confidence that demand will hold across streaming and experiences. Investors will watch the Q4 earnings call for updated segment margins and progress on the TikTok partnership rollout.

This article is for informational purposes only and does not constitute investment advice.