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The Best Options Trading Strategy for Disney (DIS) Earnings

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On Tuesday, August 9th, The Walt Disney Company (DIS - Free Report) will release its third quarter 2016 earnings results. The company is currently a Zacks Rank #3 (Hold) and shares are down more than 8.5% year-to-date.

Watch our video to see David Bartosiak's thoughts on Diseny's past earnings, looks at what is going on with the company, and he'll give us his thoughts on their upcoming earnings announcement.

Furthermore, Dave will look into some potential options trades for investors looking to make a play on Disney ahead of earnings.

The Walt Disney Company in Focus

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. The company operates broadcast and cable television networks, domestic television stations, and radio networks and stations; and involved in the television production and television distribution operations. Its cable networks include EPS, Disney Channels, and ABC Family, as well as UTV/Bindass and Hungama. The company owns eight domestic television stations. It also owns and operates the Walt Disney World Resort in Florida, 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, as well as licenses its intellectual property to a third part for the operations of the Tokyo Disney Resort in Japan.

Disney is coming off of a slight earnings miss of 2.86% last quarter, posting EPS that was $0.04 below the Zacks Consensus Estimate. That miss on earnings is the only one Disney has had in the last 4 quarters, as otherwise the company has beaten on earnings. Its average earnings surprise over the last 4 quarters is 4.30%.

DISNEY WALT Price and EPS Surprise

DISNEY WALT Price and EPS Surprise | DISNEY WALT Quote

Heading into this earnings report, our Most Accurate Estimate for DIS is $1.61, which is in line with the Zacks Consensus Estimate, meaning that the earnings surprise prediction figure is 0%.

A sturdy movie business thanks to recent blockbusters and strong performance of its Parks & Resorts division continue to act as catalysts for Disney. The success of its movies will also mean solid business for its Consumer Products division as demand for the merchandise associated with the successful movies tends to greatly increase. In regards to its Parks & Resorts division, it is expected to report robust financial numbers, which could help to drive the company’s bottom line.

The main concern for Disney is the performance of ESPN, which for some time now has seen declining subscriber counts and higher programming costs, which have been a cause of concern for investors. As Disney’s long-time cash show, ESPN has been under a great deal of pressure as the Pay-TV landscape continues to change as consumers increasingly are switching to online TV. Disney also has a large international presence, which leaves it prone to unfavorable foreign currency translations, which could affect both its top- and bottom-line results.

 The Walt Disney Company Price, Consensus and EPS Surprise

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Dave Bartosiak is the editor of the Momentum Trader and Home Run Investor service. He has over a decade of experience in the financial services industry. He has traded forex, futures, stocks, and options. Mr. Bartosiak is a frequent guest on popular business news TV channels such as Bloomberg TV. He’s also the host of a light-hearted, Millennial-minded series of videos called “Trending Stocks.”

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