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Disney (DIS) to Report Q1 Earnings: What's in the Cards?
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Disney (DIS - Free Report) is slated to report first-quarter fiscal 2019 results on Feb 5.
The company’s earnings beat the Zack Consensus Estimate in three of the trailing four quarters, delivering average positive surprise of 8.5%.
In fourth-quarter 2018, adjusted earnings increased 38% from the year-ago quarter to $1.48 per share. Revenues increased 12% from the year-ago quarter to $14.31 billion.
However, the Zacks Consensus Estimate for first-quarter fiscal 2019 earnings has declined from $1.59 to $1.57 over the past seven days, indicating year-over-year decline of 16.9%. Moreover, the consensus mark for revenues, which is pegged at $15.18 billion, is down 1.1% year over year.
Let’s see how things are shaping up for this announcement.
Demand-Based Pricing to Aid Parks & Resorts Revenues
Disney’s innovative strategies in managing its Parks & Resorts are expected to aid the segments revenues in first-quarter fiscal 2019. To better manage customer attendance, the company extended its demand-based pricing strategy to multi-day tickets in the soon-to-be reported quarter.
The initiative will not only distribute demand throughout the year to avoid any fluctuations in revenues but may also help Disney provide better services by reducing wait time.
Additionally, these changes are expected to enrich user experience thereby aiding attendance growth and per capita spending. Notably, these were the two main contributors to Parks & Resorts (35.4% of revenues) segment revenue growth of 8.6% year over year to $5.1 billion in fourth-quarter fiscal 2018.
Box Office Success to Drive Studio Entertainment Growth
This apart, Disney’s Studio Entertainment segment may get a boost with the box office success of Ralph Breaks the Internet and Mary Poppins Returns. Notably, Ralph Breaks the Internet, with an estimated production cost of $175 million collected about $211 million globally after the first five days of its release.
Moreover, robust collections from these movies are expected to boost demand for merchandise. This bodes well for the Consumer Products division.
Streaming Losses May Hurt Results
Although Disney’s sports streaming service ESPN+ is gaining increasing traction among users on the back of a strong content lineup and targeted demographic advantage, significant competition from Amazon (AMZN - Free Report) is a headwind. Amazon Prime also offers an array of exclusive content including major sports content.
Moreover, increasing investments in its streaming platforms are expected to hurt first-quarter fiscal 2019 margins. Notably, management guided that investments in ESPN+ will have a negative impact of $100 million on operating income in first-quarter fiscal 2019.
Moreover, Disney lost more than $1 billion from its streaming segments in 2018, of which Hulu’s loss of about $580 million was the major factor. Notably, Hulu is jointly owned by Disney (30%), Fox (30%), Comcast (30%) and AT & T (10%).
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Disney has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:
Take-Two Interactive (TTWO - Free Report) has an Earnings ESP of +3.36% and a Zacks Rank #1.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Disney (DIS) to Report Q1 Earnings: What's in the Cards?
Disney (DIS - Free Report) is slated to report first-quarter fiscal 2019 results on Feb 5.
The company’s earnings beat the Zack Consensus Estimate in three of the trailing four quarters, delivering average positive surprise of 8.5%.
In fourth-quarter 2018, adjusted earnings increased 38% from the year-ago quarter to $1.48 per share. Revenues increased 12% from the year-ago quarter to $14.31 billion.
However, the Zacks Consensus Estimate for first-quarter fiscal 2019 earnings has declined from $1.59 to $1.57 over the past seven days, indicating year-over-year decline of 16.9%. Moreover, the consensus mark for revenues, which is pegged at $15.18 billion, is down 1.1% year over year.
Let’s see how things are shaping up for this announcement.
The Walt Disney Company Price and EPS Surprise
The Walt Disney Company Price and EPS Surprise | The Walt Disney Company Quote
Demand-Based Pricing to Aid Parks & Resorts Revenues
Disney’s innovative strategies in managing its Parks & Resorts are expected to aid the segments revenues in first-quarter fiscal 2019. To better manage customer attendance, the company extended its demand-based pricing strategy to multi-day tickets in the soon-to-be reported quarter.
The initiative will not only distribute demand throughout the year to avoid any fluctuations in revenues but may also help Disney provide better services by reducing wait time.
Additionally, these changes are expected to enrich user experience thereby aiding attendance growth and per capita spending. Notably, these were the two main contributors to Parks & Resorts (35.4% of revenues) segment revenue growth of 8.6% year over year to $5.1 billion in fourth-quarter fiscal 2018.
Box Office Success to Drive Studio Entertainment Growth
This apart, Disney’s Studio Entertainment segment may get a boost with the box office success of Ralph Breaks the Internet and Mary Poppins Returns. Notably, Ralph Breaks the Internet, with an estimated production cost of $175 million collected about $211 million globally after the first five days of its release.
Moreover, robust collections from these movies are expected to boost demand for merchandise. This bodes well for the Consumer Products division.
Streaming Losses May Hurt Results
Although Disney’s sports streaming service ESPN+ is gaining increasing traction among users on the back of a strong content lineup and targeted demographic advantage, significant competition from Amazon (AMZN - Free Report) is a headwind. Amazon Prime also offers an array of exclusive content including major sports content.
Moreover, increasing investments in its streaming platforms are expected to hurt first-quarter fiscal 2019 margins. Notably, management guided that investments in ESPN+ will have a negative impact of $100 million on operating income in first-quarter fiscal 2019.
Moreover, Disney lost more than $1 billion from its streaming segments in 2018, of which Hulu’s loss of about $580 million was the major factor. Notably, Hulu is jointly owned by Disney (30%), Fox (30%), Comcast (30%) and AT & T (10%).
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Disney has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:
World Wrestling Entertainment, Inc. has an Earnings ESP of +26.31% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Take-Two Interactive (TTWO - Free Report) has an Earnings ESP of +3.36% and a Zacks Rank #1.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>