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Factors Likely to Influence Disney's (DIS) Earnings in Q2

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Media giant The Walt Disney Company (DIS - Free Report) is slated to report second-quarter fiscal 2017 results after the closing bell on May 9. In the previous quarter, the company had registered a positive earnings surprise of 4.7%. However, the company has lagged the Zacks Consensus Estimate in two out of the trailing four quarters, with an average earnings miss of 0.5%. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The question lingering in investors’ minds now is whether Disney will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is pegged at $1.44, up over 6% year over year. We note that the Zacks Consensus Estimate has improved by a penny in the past 30 days. Analysts polled by Zacks expect revenues of $13,478 million, up nearly 4% from the year-ago quarter.

We noted that the stock has outperformed the Zacks categorized Media Conglomerates industry in the past six months. The company’s shares have increased 18.2%, while the Zacks categorized industry has gained 11.7%.

Factors at Play

Sturdy movie business due to recent blockbusters and strong performance of its Parks & Resorts division continues to act as catalysts. The company’s recently released live-action remake “Beauty and the Beast” has done great business at the box office. So far, the movie has collected more than $1 billion at the global box office. Ever since the acquisitions of Pixar in 2006, Disney has released many blockbusters under Pixar, Marvel, Lucasfilm and Disney Animation banners.

Disney’s Parks & Resorts division are expected to report another impressive quarter. In first-quarter fiscal 2017, the segment reported revenues of $4,555 million, up 6% year over year. The company anticipates Shanghai Disney Resort to cross 10 million visitors by its first anniversary. Disney is focused on deploying capital toward expansion of the Parks and Resorts business, consequently, increasing market share and creating long-term growth opportunities.

In the past few quarters Disney’s ESPN has been a hot topic in the media industry and investors are closely monitoring performance. For some time now, declining subscriber count and higher programming costs have been a cause of concern for investors. Disney’s primary cash cow, ESPN, has been under immense pressure as the pay-TV landscape continues to change owing to migration of subscribers to online TV. Falling subscriptions will have a telling effect on the network’s ad revenues.

Walt Disney Company (The) Price, Consensus and EPS Surprise

Walt Disney Company (The) Price, Consensus and EPS Surprise | Walt Disney Company (The) Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Disney is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Disney has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at $1.44. The company’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Tyson Foods, Inc. (TSN - Free Report) has an Earnings ESP of +3.77% and currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deckers Outdoor Corp. (DECK - Free Report) has an Earnings ESP of +50.00% and carries a Zacks Rank #3.

Dean Foods Co. currently has an Earnings ESP of +5.88% and a Zacks Rank #3.

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