Media conglomerate and Dow-30 component The Walt Disney Company (DIS Free Disney Stock Report) issued somewhat lackluster fiscal third-quarter results (year ends September 30th). Investors frowned upon the news, and the stock slipped in pre-market trading.

Earnings came in at $1.51 a share for the June quarter, a 5% decline from the year-earlier period, and $0.19 below our estimate. Revenues came in roughly flat, at $14.238 billion ($312 million below our forecast). Higher operating costs at ESPN weighed on Media Networks. Plus, the Studio Entertainment segment logged unfavorable comparisons, as this year's fiscal third-quarter releases did not match last year's late Spring/early Summer blockbusters. As a result, we have reduced our full-year fiscal 2017 share-earnings estimate by a dime, to $5.90. (Still, this would be a 3% increase from last year's bottom-line tally.)

Parks & Resorts remained a bright spot over the period. The segment's revenues rose 12% and its profits advanced 18%. The timing of the Easter holiday (which fell entirely in the fiscal third quarter, versus the second quarter of 2016) boosted results. Disney's hefty investments in its vacation destinations have begun to pay off, and we think it will continue to expand its domestic and international properties.

The company will be shifting its media distribution. Disney is in the midst of acquiring a majority stake (75%) in BAMTech. The media conglomerate ought to leverage the technology of the media streaming service. It aims to introduce ESPN as an on-demand sports-viewing platform in early 2018. And management announced plans to launch a Disney-branded subscription streaming service by 2019. Disney's focus on Direct-to-Consumer streaming offerings should lead to robust growth over the long term. It will likely invest in original programming for the smaller screen. This strategic shift should help leverage its brands and content, as well as help it keep up with the changing mediascape as it fights for additional market share.

In the same vein, the company announced that it will end its distribution agreement with Netflix (NFLX), beginning with its 2019 calendar theatrical slate. (And it is unclear whether Netflix will maintain the rights to license Marvel characters for its original programming).

Disney's strong intellectual property and brand equity remain the jewels in its crown. And the ongoing investment and expansion of its Parks & Resorts, and a powerful theatrical slate, should continue to spur the top and bottom lines moving forward.

Disney earns our highest scores for Financial Strength (A++) and Safety (1). And even though the stock price has had a nice run-up over the last few months, we think the aforementioned shift in its growth strategy will help the blue chip advance nicely over the long haul.

About The Company:The Walt Disney Company operates Media Networks such as ABC and ESPN, and Studio Entertainment. Its world famous parks and resorts include Disneyland, Walt Disney World (Magic Kingdom, Epcot, and Disney’s Hollywood Studios), while the company earns royalties from Tokyo Disneyland and manages Disneyland Resort Paris and Hong Kong Disneyland. It also operates a cruise line and Consumer Products and Interactive Media segments. ABC was acquired in February, 1996; Pixar in May, 2006; and Marvel in December, 2009.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.