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Disney (DIS) to Report Q3 Earnings: What's in the Cards?

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Disney (DIS - Free Report) is set to report third-quarter fiscal 2019 results on Aug 6.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 6.6%.

In second-quarter fiscal 2019, earnings of $1.61 per share comfortably beat the Zacks Consensus Estimate by a couple of cents but declined 13% year over year.

Revenues of $14.92 billion increased 3% from the year-ago quarter and surpassed the consensus mark of $14.64 billion.

The Zacks Consensus Estimate for third-quarter fiscal 2019 earnings has been steady at $1.76 over the past 30 days. The figure indicates a decline of 5.9% from the year-ago quarter’s reported figure.

The consensus mark for revenues is pegged at $21.68 billion, implying growth of 42.4% from the year-ago period’s reported figure.
 

The Walt Disney Company Price and EPS Surprise

The Walt Disney Company Price and EPS Surprise

The Walt Disney Company price-eps-surprise | The Walt Disney Company Quote

 

Let’s see how things are shaping up for this announcement.

Avenger’s Endgame Success to Aid Top-line

Marvel’s Avengers: Endgame released on April 26 broke box-office records, hitting the billion-dollar mark in just five days.

The movie collected $350 million domestically and $1.2 billion worldwide by its opening weekend and shattered the record of Avengers: Infinity War, which took 11 days to hit the billion-dollar level.

Most recently, Avengers: Endgame surpassed Avatar to become the highest-grossing film of all time.

Additionally, Disney’s Aladdin released on May 24 has passed the $1-billion benchmark. Per CNBC, Toy Story 4 is set for a similar record.
 
Notably, Disney overall has collected a record $7.67 billion at the global box office this year till date.

The phenomenal success of Avengers: Endgame must have driven Studio Entertainment segment’s top line in the to-be-reported quarter.

The Zacks Consensus Estimate for Studio Entertainment revenues is currently pegged at $4.76 billion, suggesting growth of 65.2% from the figure reported in the year-ago quarter.

DTC Investments to Hurt Profitability

Disney’s third-quarter fiscal 2019 profitability is likely to decline due to its ongoing investments in direct-to-consumer (DTC) businesses that now include Hulu, ESPN+ and the upcoming Disney+ streaming service.

Management expects DTC related investments to dent segment operating profit by almost $460 million.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Stocks with a Zacks Rank #4 or 5 (Sell-rated) are best avoided.

Disney has a Zacks Rank #3 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 some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

CACI International (CACI - Free Report) has an Earnings ESP of +4.02% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cisco Systems (CSCO - Free Report) has an Earnings ESP of +1.53% and a Zacks Rank #2.

Discovery (DISCA - Free Report) has an Earnings ESP of +5.05% and a Zacks Rank #3.

 

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