Can Walt Disney Co (NYSE:DIS) regain its magic?

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Walt Disney (DIS) Consumer Discretionary – Media | Reports August 9, After Market Closes

Key Takeaways

  • The Estimize consensus is looking for earnings per share of $1.63 on $14.32 billion in revenue, 2 cents higher than Wall Street on the bottom line and $150 million on the top
  • ESPN and potential Bob Iger successors will garner a majority of investors attention
  • Theme parks and studio entertainment are Disney’s two fastest growing markets, seeing gains from blockbuster titles
  • What are you expecting for DIS? Get your estimate in here!

Disney is scheduled to report second quarter results Tuesday, after the market closes. The first quarter fell short of expectations largely due to the ongoing struggles of ESPN. Cord cutting habits have led to a steep decline in both subscribers and viewership. The market takes this side of the business very seriously because it accounts for over 30% of the company’s operating income. Unfortunately there isn’t any evidence to suggest that these trends will pick up this quarter.

The Estimize consensus is looking for earnings per share of $1.63 up 12% from the same period last year. That estimate has increased 6% since Disney’s last report in May. Revenue is anticipated 10% higher at $14.32 billion, a considerable jump given ESPN’s woes. Shares are still down 9% year to date and 20% in the past 12 months. The stock, on average, doesn’t do well during earnings season either, declining 1% immediately after a report. Three segment typically stick out when Disney reports earnings; media networks, theme parks and studios. Media revenue has been in a steady decline since ESPN troubles began. Last quarter ad sales at the sports network fell 13% because of fewer college football playoff games. The company has made strides in alleviating the downturn by partnering with distributors. Noted distributors like Sling TV are seeing encouraging upward momentum after adding ESPN to its portfolio.

Investors often forget that studios and theme parks have performed remarkably well in recent quarters. The film unit took off due to the blockbuster hit Star Wars: The Force Awakens and they haven’t looked back since. Last quarter the company saw sales from studio entertainment rise 22% thanks to Zootopia, Captain America and The Jungle Book. This quarter should be largely driven by the success of Finding Dory. Disney’s movie pipeline is incredibly deep so it won’t be surprising if revenue continues to grow from here.

The recent success of its films have carried over to theme parks. Disney World is in the process of opening a Star Wars themed attraction and will continue to do so with other popular movies. This segment reported a 4% gain last quarter and should continue to be a huge earner moving forward. Disney recently opened new theme parks in Asia. Disney Shanghai has already attracted millions of visitors since opening less than a month ago.

Despite the success of studio entertainment and theme parks, ESPN will still make or break its quarterly earnings. Any indication of Bob Iger’s success will also garner a considerable amount of attention.
Do you think DIS can beat estimates? There is still time to get your estimate in here!