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3 Key Estimates Ahead of Disney's Q1 Earnings Report

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Shares of Disney (DIS - Free Report) dropped nearly 1% in morning trading hours Tuesday, just hours before the media and entertainment conglomerate is scheduled to release its latest quarterly earnings report after the market closes.

Disney has slipped more than 5% over the past five trading periods, primarily because of a market-wide sell-off that has erased the year-to-date gains of nearly all of our major indexes. But the Burbank, California-based behemoth could inspire a rebound if its earnings report impresses investors.

So what does Disney have in store for Wall Street in its Q1 report? Well, our current Zacks Consensus Estimates are calling for adjusted earnings of $1.62 per share and total revenues of $15.24 billion. These results would represent modest growth rates of 4.5% and 3.1%, respectively.

But earnings and revenue are just two of the many things investors will be looking at when Disney reports on Tuesday afternoon. In fact, it is entirely possible that the company’s post-earnings momentum is based on its performance in specific key business segments.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Our consensus estimate file is currently calling for Disney to report Media Networks revenues of $6.35 billion, which would represent growth of 1.8% year-over-year. This performance is expected to be lifted by Cable Networks revenues of $4.53 billion, which would mark growth of 2.3% from the year-ago period. Meanwhile, Broadcasting revenues are projected to come in at $1.81 billion, up just 0.4% from the prior-year period.

Disney is desperately trying to turn things around at its flagship sports-focused TV channel, ESPN. Declining subscribers and higher programming costs remain a concern in this segment, and investors should be cautious of any negative news on this end. Disney’s report may also include an update on the company’s planned direct-to-consumer ESPN streaming service, which is expected to launch in early 2018.

Our current consensus estimates are also calling for Disney to report Parks & Resorts revenues of $4.87 billion, up about 6.8% year-over-year. This segment was an impressive performer for Disney in fiscal 2017, and we expect that trend to continue.

Disney remains focused on investing capital toward expansion of its Parks & Resorts business, so this unit could continue to be a growth driver for years to come. It is also worth noting that a stronger global economy tends to inspire tourism and travel, which is obviously a great trend for Disney parks.

Finally, investors will be interested in seeing the totals from Disney’s Studio segment. Based on our current consensus estimates, we expect Disney to report total Studio revenues of $2.77 billion, down roughly 9.8% from the year-ago period.

Disney’s Star Wars: The Last Jedi, Thor: Ragnarok, and Coco have been remarkable performers for the company in the quarter, but this unit is facing tough year-over-year comparisons based on its strength in the prior-year quarter.

If any of these key business segments can significantly outperform these consensus estimates, they could be the catalyst needed for Disney to bounce back from the recent market sell-off. Make sure to check back here for our full coverage once Disney reports later today!

Want more analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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