Disney Experiences Deliver Record Quarter, But Stock Still Undervalued

Disney's experiences segment, which includes its theme parks and cruise business, generated $3 billion in operating income on nearly $10 billion in revenue during its fiscal quarter ending June 27. This represents a 20% jump in operating income from the same period last year.

The experiences segment, which is Disney's profit engine, accounted for 54% of the company's total operating income for the quarter. Theme park admissions rose 9% year over year, driving up spending on merchandise, food, and beverages.

Disney's core business delivered a record quarter, with healthy consumer demand at the heart of its entertainment empire. The company also saw strength in its cruise business, thanks to the launch of two new ships during the past year.

The current discount on Disney shares reflects uneven performance elsewhere across the entertainment empire. Disney is dealing with long-term declines in cable subscribership and content costs that continue to weigh on its streaming operating margin, which was 13% in the quarter.