Media

What to Expect From Disney Earnings

Chris Lange

Published: May 10, 2016 10:15 am

Last Updated: January 13, 2020 9:38 am

Walt Disney Co. (NYSE: DIS) is scheduled to report its fiscal second-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $1.40 in earnings per share (EPS) on $13.19 billion in revenue. In the same period of last year, the company posted EPS of $1.23 and $12.46 billion in revenue.

Keep in mind that Disney is one of 24/7 Wall St.’s 10 stocks to own for the decade.

The company operates broadcast and cable television networks, domestic television stations, and radio networks and stations, and it is involved in the television production and television distribution operations. Its cable networks include ESPN, Disney Channels, and ABC Family, as well as UTV/Bindass and Hungama.

The company also owns and operates the Walt Disney World Resort in Florida; the Disneyland Resort in California; Disney Resort & Spa in Hawaii; Disney Vacation Club, Disney Cruise Line and Adventures by Disney; and Disneyland Paris, Hong Kong Disneyland Resort and Shanghai Disney Resort. It also licenses its intellectual property to a third party for the operations of the Tokyo Disney Resort in Japan.

In the previous period, revenue was more than $15 billion and per-share earnings rose by more than a third. However, subscriber numbers at the flagship ESPN raised a huge red flag for investors. Operating income dropped in both cable networks and broadcasting. Revenue was up 9% at the cable unit, thanks to growth of domestic Disney Channels, but a decrease at ESPN and lower equity income from A&E dragged down operating income by 5%.

This company was recently added to Piper Jaffray’s list of Overweight stocks (raised from Neutral) with a $120 price target. What stood out was that the analyst admitted having missed much of the growth wave in recent years, but also said that Disney was entering a key growth phase now. Another issue brought up was that the ESPN focus is in part from people moving to skinnier bundles rather than cord-cutters, but the movies and theme parks will be the real growth.

One big driver is a dividend growth, as Disney shares move from lower yields of closer to 1% to much higher in the years ahead. That yield’s lowness is due to past massive share appreciation.

A few analysts weighed in on Disney prior to the earnings report:

• Drexel Hamilton reiterated a Buy rating.
• JPMorgan reiterated an Overweight rating.
• Nomura has a Buy rating and raised its price target to $115 from $110.
• RBC Capital reiterated a Market Perform rating.

So far in 2016, Disney’s performance has been practically flat year to date. Over the past 52 weeks, the stock is down about 3%.

Shares of Disney were trading at $106.02 on Tuesday, with a consensus analyst price target of $109.50 and a 52-week trading range of $86.25 to $122.08.