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Is Disney (DIS) Set to Beat Quarterly Earnings Estimates Today?

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Shares of Disney (DIS - Free Report) climbed 1.3% on Monday as investors began to gear up for the release of the media and entertainment powerhouse’s second quarter financial results. Disney has failed to inspire a ton of investor confidence recently, but a strong quarter could help the company get back on track.

Disney stock had sunk 9% over the last year and nearly 1% during the last four weeks prior to yesterday’s gains. Much of Disney’s recent downturn has been blamed on ESPN’s continued struggles. With that said, its Studio Entertainment division revenue actually slumped 1% in the first quarter. Luckily for investors, Disney’s Parks and Resorts unit surge 13% to help lift the company’s overall revenues.

Still, at this point, investors need to know what to expect from Disney’s Q2 earnings as they might be the only thing that can propel the stock in the near-term, while many wait to see what comes of the proposed Fox (FOXA - Free Report) deal.

Disney Q2 Outlook

 

Our current Zacks Consensus Estimate is calling for Disney’s quarterly revenues to jump by 6.7% from the year-ago period to reach $14.23 billion. Investors should also be pleased to note that the company’s quarterly earnings are projected to pop by 12% to reach $1.68 per share.

Furthermore, Disney has earned three upward earnings estimate revisions within the last 30 days. But investors will need to know a little bit more in order to understand if Disney is expected to beat or miss our current earnings estimate. Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, either way.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

In contrast, a stock with a Zacks Rank #3 (Hold) or worse, coupled with a negative Earnings ESP, is one that we typically want to avoid during earnings season.

Disney’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for earnings of $1.69 per share, which comes in 1 cent above our current consensus estimate. The company is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 0.94%.

Therefore, investors should consider Disney a stock that could top quarterly earnings estimates when it reports after the closing bell today.

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