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Does the Walt Disney Company Still Have the Magic?
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Disney stock is rising from the ashes – and all of us are witnesses.
A reviving theme park business on both a domestic and international level is helping the company regain momentum. Recent attractions such as the Frozen theme land at Hong Kong Disney and Walt Disney Park in Paris, along with the Zootopia theme land at Shanghai Disney, are expected to significantly boost revenue prospects.
Disney has been in the crosshairs the past few years with Florida Governor Ron DeSantis. The company managed to reach a settlement agreement late in March regarding the Central Florida Tourism Oversight District, which runs the special tax district where the Walt Disney World theme park is located.
The settlement paves the way for additional theme-park development in the Sunshine State. Disney plans to invest $17 billion in Florida over the next decade as part of a broader upgrade project to its theme parks.
Disney stock has experienced a flurry of brokerage upgrades and price target hikes this year. Just recently, the company successfully fought off Nelson Peltz’s attempt to secure board seats; the triumph in the contested proxy battle was met with a stamp of approval by Disney’s board and CEO Bob Iger in their efforts to turn around the company.
Disney Emerges from the Streaming War
The entertainment giant is strengthening its position in a streaming space that is currently dominated by rival Netflix.
Disney’s expanding streaming services include the likes of ESPN+, Hulu, Disney+, and Star+. The offerings are expected to be major growth drivers over the long-term.
In particular, Disney+ has developed into a key player, primarily driven by its solid content portfolio. The service offers more than 700 movies and nearly 12,000 episodes of various televisions shows from recognized brands such as Pixar, Marvel, Star Wars, and National Geographic.
Disney is taking steps to prevent users from sharing passwords for its Disney+ streaming service. Taking a page out of Netflix’s book, Disney will start cracking down on password sharing in June in several countries, and more broadly beginning in September.
Hulu, which is owned by Disney, began limiting password sharing outside of households last month in an effort to boost subscriber growth. Hulu ended the first quarter with 49.7 million paid subscribers, a gain of 1.2 million from the figure reported in the prior quarter.
The Zacks Rundown
Disney (DIS - Free Report) , a Zacks Rank #3 (Hold), is part of the Zacks Media Conglomerates industry, which currently ranks in the top 31% out of approximately 250 industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. This group has soared more than 20% this year, handily outpacing the general market:
Image Source: Zacks Investment Research
Also note the favorable characteristics for stocks in this industry below:
Image Source: Zacks Investment Research
Quantitative research studies suggest about half of a stock’s future price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on stocks within the top Zacks Ranked Industries, we can provide a constant tailwind to our investing success.
The company has witnessed its share price climb more than 30% already this year:
Image Source: StockCharts
Disney has established an impressive history of beating earnings estimates. Most recently, the company delivered fiscal Q1 earnings of $1.22/share, a 25.8% surprise over the $0.97/share consensus estimate.
The figure reflected a 23% increase from the year-ago period. The media conglomerate exceeded the EPS mark in each of the last four quarters, with an average earnings surprise of 14.17%.
Analysts covering DIS are mainly in agreement in terms of earnings estimate revisions; fiscal second-quarter estimates have been raised by 9.18% in the past 60 days. The Q2 Zacks Consensus Estimate now stands at $1.07/share, representing a 15.1% potential improvement from last year.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently seen positive earnings estimate revision activity. The idea is that this recent information can serve as a more accurate predictor of the future, which can give investors a leg up during earnings season.
The technique has proven to be quite useful in finding positive surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks delivered a positive surprise 70% of the time according to our 10-year back test.
DIS is a Zacks Rank #3 (Hold) and boasts a +3.84% Earnings ESP. Another beat may be in the cards when the company reports its fiscal Q2 results in May.
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Does the Walt Disney Company Still Have the Magic?
Disney stock is rising from the ashes – and all of us are witnesses.
A reviving theme park business on both a domestic and international level is helping the company regain momentum. Recent attractions such as the Frozen theme land at Hong Kong Disney and Walt Disney Park in Paris, along with the Zootopia theme land at Shanghai Disney, are expected to significantly boost revenue prospects.
Disney has been in the crosshairs the past few years with Florida Governor Ron DeSantis. The company managed to reach a settlement agreement late in March regarding the Central Florida Tourism Oversight District, which runs the special tax district where the Walt Disney World theme park is located.
The settlement paves the way for additional theme-park development in the Sunshine State. Disney plans to invest $17 billion in Florida over the next decade as part of a broader upgrade project to its theme parks.
Disney stock has experienced a flurry of brokerage upgrades and price target hikes this year. Just recently, the company successfully fought off Nelson Peltz’s attempt to secure board seats; the triumph in the contested proxy battle was met with a stamp of approval by Disney’s board and CEO Bob Iger in their efforts to turn around the company.
Disney Emerges from the Streaming War
The entertainment giant is strengthening its position in a streaming space that is currently dominated by rival Netflix.
Disney’s expanding streaming services include the likes of ESPN+, Hulu, Disney+, and Star+. The offerings are expected to be major growth drivers over the long-term.
In particular, Disney+ has developed into a key player, primarily driven by its solid content portfolio. The service offers more than 700 movies and nearly 12,000 episodes of various televisions shows from recognized brands such as Pixar, Marvel, Star Wars, and National Geographic.
Disney is taking steps to prevent users from sharing passwords for its Disney+ streaming service. Taking a page out of Netflix’s book, Disney will start cracking down on password sharing in June in several countries, and more broadly beginning in September.
Hulu, which is owned by Disney, began limiting password sharing outside of households last month in an effort to boost subscriber growth. Hulu ended the first quarter with 49.7 million paid subscribers, a gain of 1.2 million from the figure reported in the prior quarter.
The Zacks Rundown
Disney (DIS - Free Report) , a Zacks Rank #3 (Hold), is part of the Zacks Media Conglomerates industry, which currently ranks in the top 31% out of approximately 250 industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. This group has soared more than 20% this year, handily outpacing the general market:
Image Source: Zacks Investment Research
Also note the favorable characteristics for stocks in this industry below:
Image Source: Zacks Investment Research
Quantitative research studies suggest about half of a stock’s future price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on stocks within the top Zacks Ranked Industries, we can provide a constant tailwind to our investing success.
The company has witnessed its share price climb more than 30% already this year:
Image Source: StockCharts
Disney has established an impressive history of beating earnings estimates. Most recently, the company delivered fiscal Q1 earnings of $1.22/share, a 25.8% surprise over the $0.97/share consensus estimate.
The figure reflected a 23% increase from the year-ago period. The media conglomerate exceeded the EPS mark in each of the last four quarters, with an average earnings surprise of 14.17%.
Analysts covering DIS are mainly in agreement in terms of earnings estimate revisions; fiscal second-quarter estimates have been raised by 9.18% in the past 60 days. The Q2 Zacks Consensus Estimate now stands at $1.07/share, representing a 15.1% potential improvement from last year.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently seen positive earnings estimate revision activity. The idea is that this recent information can serve as a more accurate predictor of the future, which can give investors a leg up during earnings season.
The technique has proven to be quite useful in finding positive surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks delivered a positive surprise 70% of the time according to our 10-year back test.
DIS is a Zacks Rank #3 (Hold) and boasts a +3.84% Earnings ESP. Another beat may be in the cards when the company reports its fiscal Q2 results in May.