Walt Disney Co. (NYSE: DIS) is set to report its fiscal third quarter earnings after the market close on Tuesday. Concerns over cord-cutting and subscriber losses at ESPN have weighed on the stock in 2017, but there are several reasons for longer-term optimism at Disney.
The good news for Disney investors is that market expectations for the third quarter seem to be relatively low, leaving room for potential upside surprise. Wall Street analysts are predicting Disney will report earnings of $1.53 per share on revenue of $14.6 billion. Those numbers would represent a 5.5 percent year-over-year EPS decline and only 2.3 percent revenue growth.
Aside from the headline numbers, Disney investors will be watching for details about key business segments. ESPN has been losing roughly 300,000 subscribers per month in the past two years as part of a long-term decline in its traditional cable TV business. Investors will be looking for updates on Disney’s own sports streaming service, as well as any changes to the pace of ESPN subscriber losses.
While the bar is exceptionally low for ESPN, Disney’s film business is facing difficult year-over-year sales comparisons thanks to 2016 summer movie hits “The Jungle Book,” “Captain America: Civil War” and “Finding Dory.” Studio revenue jumped 40 percent in the third quarter a year ago due to the jam-packed summer lineup.
Disney has had its share of hits this summer as well, including “Guardians of the Galaxy Vol. 2″ and “Pirates of the Caribbean: Dead Men Tell No Tales,” but box office data show Disney’s top films are trending below last summer’s levels.
It’s unlikely that Disney will report impressive top or bottom-line growth numbers in the third quarter, but CNBC analyst Jim Cramer recently said long-term Disney investors shouldn’t get too hung up on one quarter.
“I know…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
