The Walt Disney Company (DIS) reported impressive first-quarter fiscal 2016 results, beating both on earnings and revenues. Worldwide success of the latest movie from the Star Wars franchise – Star Wars: The Force Awakens – drove both the Studio Entertainment and Consumer Products & Interactive Media segments (read: Disney Star Wars Sets $1B Record: 4 Forceful ETFs).
 
In the after-hours trading session on Tuesday, the stock was down 3.5%. This can largely be attributed to concerns about ESPN. Disney’s cash cow ESPN has been under pressure for some time now as its subscribers have been cutting the cord. The Pay TV landscape has changed drastically in recent years with subscribers moving to online streaming services like Netflix (NFLX).
 
Although the CEO, Bob Iger, defended ESPN on the first quarter 2016 conference call stating that the company has seen an uptick in subscription growth in the last couple of months. This is primarily attributable to growth of certain light packages that ESPN has been including as part of Dish. Meanwhile, the company is looking for opportunities with new emerging platform providers, which could mean over-the-top or online streaming options for ESPN (read: 4 Solid Reasons to Buy Consumer Discretionary ETFs).
 
Quarterly Numbers
 
Walt Disney Company posted first-quarter fiscal 2016 earnings per share of $1.63, which rose 28.3% year over year and beat the Zacks Consensus Estimate of $1.44, marking the tenth consecutive quarter of an earnings beat.
 
Revenues were up 14% year over year to $15.2 billion, beating the Zacks Consensus Estimate of $14.9 billion. The increase was attributable to higher revenues from Media Networks (up 8%), Parks and Resorts (up 9%), Studio Entertainment (up 46%) and Consumer Products & Interactive Media segment (up 8%).
 
Cable Networks revenues for the quarter were up 9% to $4.5 billion. However operating income in the sub-segment decreased 5% to $1.2 billion due to a decrease at ESPN attributable to higher programming costs.
 
DIS currently has a decent Zacks Rank #3 (Hold), underscoring its potential for further upside. Though concerns over ESPN remain, given impressive first-quarter results, we have highlighted four ETFs with heavy exposure to this giant for investors seeking to bet on the stock along with the broader industry at this time (see: all Consumer Discretionary ETFs here).
 
Consumer Discretionary Select Sector SPDR Fund (XLY)
 
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. With an asset base of $9.3 billion, XLY is the largest and most popular ETF in its space. Holding 88 shares in its basket, Walt Disney has an exposure of 6.9% in the fund. From a sector look, Media takes the top spot with 25.6% of assets, followed by Specialty Retail (20.2%). The product trades in a solid volume of 8.4 million shares per day and charges 14 bps in fees. XLY has lost 12.1% in the year-to-date view (as of February 9, 2019) and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: ETFs to Watch Post Amazon's Big Earnings Miss).
 
Vanguard Consumer Discretionary ETF (VCR)
 
This ETF follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index, holding a large basket of 383 stocks. Walt Disney, at the third spot, has an exposure of 5.7% in the fund. As far as sector allocation is concerned, Internet Retail takes the top spot in the fund (14.1%) followed by Restaurants (10.5%), Movies & Entertainment (10.2%) and Cable & Satellite (9.8%). The product has managed to accumulate roughly $1.7 billion in its asset base so far and trades in a moderate volume of nearly 180,000 shares per day. It is very cheap with 10 bps in annual fees. VCR was down 13% since the start of the year and currently sports a Zacks ETF Rank #1 with a Medium risk outlook (read: Consumer Confidence Rebounds: 2 Top-Ranked ETFs to Buy).
 
MSCI Consumer Discretionary Index ETF (FDIS)
 
This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding a large basket of 388 consumer discretionary equities in the U.S. Walt Disney accounts for 5.7% of the fund’s assets. From a sector perspective, Media takes the top spot in the fund with 25.1% of assets, followed by Specialty Retail (19.6%). The product has amassed $190.3 million in its asset base and trades in a moderate volume of more than 171,000 shares per day. It charges 12 bps in annual fees. FDIS slumped 13.1% so far this year and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
 
iShares Dow Jones US Consumer Services Sector Index Fund (IYC)
 
The fund targets the Dow Jones US Consumer Services Index. The 186-stock fund has accumulated about $912.3 million in assets. The fund trades in a volume of 89,000 shares per day. Walt Disney accounts for 5.4% share of the basket, taking the third position. The fund charges 43 bps in fees. It has a tilt toward retailing (34.6%) and media (23.9%) stocks. So far this year, the fund is down 11.9% and has a Zacks ETF Rank #1 with a Medium risk outlook.
 
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DISNEY WALT (DIS): Free Stock Analysis Report
 
NETFLIX INC (NFLX): 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
 
ISHARS-US CN CY (IYC): ETF Research Reports
 
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