Earnings Watch: Time for ‘Avengers: Endgame’ to break yet another record for Disney

“Avengers: Endgame” has already broken the records for box-office receipts in an opening weekend and overall, and helped The Walt Disney Co. establish a new record for film revenue with a few months to go. Now it is time for the next record Thanos is expected to snap out of existence. Read More...

“Avengers: Endgame” has already broken the records for box-office receipts in an opening weekend and overall, and helped the Walt Disney Co. establish a new annual record for film revenue with a few months to go.

Now it is time for the next record that Thanos is expected to snap out of existence: Disney’s movie profit.

When Disney DIS, -2.41% reports fiscal third-quarter earnings Tuesday afternoon, the company is expected to report record quarterly operating income from its movie-studio business of $1.09 billion, according to analyst estimates recorded by FactSet. It would be only the second time that Disney has managed to top $1 billion in film profit in a single three-month period, after reporting $1.01 billion in profit in the quarter that “Star Wars: The Force Awakens” launched.

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Disney’s quarter running from the end of March to the end of June was dominated by “Endgame,” the finale of a storyline that had Marvel’s top movie characters battling with Thanos, a god-like creature from space that intends to destroy half of all life in the entire universe. The movie eventually took the title of highest-grossing movie of all time without adjusting for inflation, surpassing 2009’s “Avatar” — intellectual property that Disney now owns as the result of a $70 billion acquisition from Fox Corp. FOX, -1.53% .

“Endgame” is not alone, however, and will be joined on the balance sheet Tuesday by the opening of “Toy Story 4,” which is pushing toward $1 billion in global box-office returns. If the Pixar sequel makes it there, it would be the fifth Disney film to achieve that milestone in this calendar year, joining remakes of “The Lion King” and “Aladdin” as well as “Endgame” prequel “Captain Marvel.” Those box-office performances are why Disney set a new annual record for a studio’s box-office receipts with five months to go in the year, and at least two more major 2019 features still scheduled to launch this fall in “Frozen 2” and “Star Wars: The Rise of Skywalker.”

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The studio’s performance is expected to push Disney’s operating profit to its highest level in three years, with an average analyst prediction of $4.33 billion. Disney’s media networks are expected to contribute $2.24 billion and the theme park’s early-summer months are expected to pitch in $1.82 billion in profit, while the company’s young streaming-technology business loses money.

Disney’s stock price has enjoyed the rise of its blockbuster films, hitting record-high prices around the “Endgame” release and topping them throughout July, with the most recent record close coming July 29 at $146.39. Shares closed Monday at $138.30, up 26.1% on the year, as the Dow Jones Industrial Average DJIA, -2.90% — which counts Disney as a component — has gained 13.5%.

The question for Disney is how it will craft a worthy sequel to this blockbuster year. “Endgame” (spoiler alert!) killed off some of the most well-known Marvel characters, the final episode in the original “Star Wars” storyline will be released before the end of 2019, and no more Pixar sequels are currently planned.

In a conference call Tuesday afternoon, expect Chief Executive Robert Iger to focus on the November launch of Disney+, which will put all those 2019 blockbuster films and their predecessors on a direct-to-consumer streaming service, as well as future “Avatar” sequels and the new phase of Marvel movies announced at Comic Con.