Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)

Email this Article

Send with mail | ahoo instead.
Required Needs to be a valid email
Required Needs to be a valid email
Should I Buy Disney Stock After Q3 Earnings?
http://mney.co/2aIuWnQ
Required Please enter the correct value.
Twitter

Should I Buy Disney Stock After Q3 Earnings?

By Cameron Saucier, Associate Editor, Money Morning • August 9, 2016

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

Disney stock

Walt Disney Co. (NYSE: DIS) reports its third-quarter earnings after the bell on Tuesday, Aug. 9. This earnings report is particularly important for the company, as Disney stock has fallen 8% year to date, ahead of the report.

Money Morning has the perfect way to play Disney stock after its earnings announcement. But before we get to our strategy, let’s look at what analysts expect from Disney’s earnings report today.

The Most Important Figures to Watch in the Disney Earnings

Investors will be looking for especially impressive cable segment and revenue numbers from Disney this quarter.

In particular, analysts will be paying close attention to the quarterly performance of ESPN, which makes up the bulk of Disney’s cable segment revenue. The sports network’s declining subscriber base has been dogging Disney stock for over a year.

In its last ratings report on July 31, Nielsen said ESPN and ESPN2 lost a combined 8% of their subscribers in July. And in the past two months, Nielsen also showed Disney losing an average of 3% of its total cable subscribers each month. Keep in mind: Although these losses are depressing, Disney could offset them this quarter with gains from new Internet cable packages.

Analysts expect Disney’s cable networks, which make up 44% of its total revenue, to post $2.1 billion in sales this quarter, according to FactSet. And despite the bleak figures from Nielsen, the estimate is a modest uptick of $55 million from Q3 2015.

For total sales, analysts project around $14.1 billion in sales for the quarter. That’s an increase of $1.04 billion from Q3 2015, according to FactSet. Analysts also expect Disney to post an EPS of $1.61 per share, up $0.16 per share from the same quarter last year.

Don’t Miss: Stocks that pay dividends deliver triple the returns of nonpayers. And these “dividend kings” have boosted payouts 50 years in a row...

Now that we’ve looked at Disney’s earnings expectations, here’s Money Morning’s recommendation for Disney stock going forward.

These are the biggest factors that will move Disney stock in 2016 and beyond…

Is Disney Stock a Buy After Q3 Earnings?

Money Morning is bullish about Disney stock, but we believe it’s best reserved for long-term investors.

That’s because Disney has a significant hurdle to climb before it can shake short-term investor uncertainty.

ESPN has been a major drag on Disney stock, and falling subscriber totals isn’t the only reason why. Last quarter, advertising at EPSN declined 13%. ESPN’s woes, however, are only a symptom of a much larger problem for Disney: declining interest in cable television (so-called cord-cutting).

People are switching to online streaming platforms. These are often simpler – and cheaper – than cable TV. Since Disney generates most of its profit from its cable segment, it needs to prioritize online streaming packages. We may get a few hints about this from Disney CEO Bob Iger today. Many expect Disney to push strongly into the online streaming sphere in the coming months, making deals to host its content with successful platforms like Netflix and Apple’s Apple TV.

Despite Disney’s cable segment problems, the entertainment company still has a ton going for it in the long term.

And these big developments make Disney stock a perfect buy right now…

This Will Drive Disney Stock in the Long Term

One major bright spot for Disney right now its studio segment. The segment’s revenue jumped 22% to $2.06 billion last quarter after the success of “Star Wars: The Force Awakens” and “Zootopia.”

The Star Wars franchise will continue to be a long-term revenue booster for Disney. The next installation in the Star Was universe, “Star Wars: Rogue One,” will be released on Dec. 12.

And don’t forget Disney’s strong track-record with its animated movies, which also typically boast big box-office numbers. Most recently, “Finding Dory” was Pixar’s biggest opening movie in history. It made $135 million in its opening weekend and has grossed $422.5 million in the United States as of July, according to ScreenCrush.

Disney also has an exciting development in its parks and resort segment. Its $5.5 billion Shanghai resort, which opened on June 16, is the largest yet for Disney. Expect to hear some early revenue figures from this resort in today’s earnings report.

The investment bank FBR & Co. projects the Shanghai resort will be profitable in the near term. Over time, the firm says the resort will be able to generate revenue up to $2 billion annually. The bulk of this revenue will come from China’s rapidly growing middle class and the nearly 330 million people that live close to the resort.

Don’t Miss: The Internet of Things revolution will create a $6 trillion market – and these five stocks are the best way to grab a piece of those gains for yourself.

Lastly – it may take some time – but Disney will eventually make its cable division more Internet-friendly. Yes, we’re expecting Disney to turn its biggest weaknesses into a major, long-term strength.

That’s because cord-cutting will actually end up benefiting Disney…

The reason is simple: Streaming platforms, like Netflix, want the best content available. And with Disney’s hit networks like ESPN and A&E being so popular, the company has powerful leverage to negotiate profitable contract deals.

Based on these long-term catalysts alone, Disney stock is an attractive investment to buy and hold for the next few years. And at $95 per share, Disney stock is offering a great entry point for interested investors.

The stock is currently down about 20% from its 52-week high of $120 per share. It hit that high back in November 2015, when it announced record EPS at the time of $4.90.

Based on the consensus of 35 analyst ratings, Disney stock has a price target of $111.29 per share by the end of the year. That’s about 16% higher from its current price.

The Bottom Line: Disney stock is a buy, but only for long-term investors who are willing to hold it for the next few years. Disney’s long-term catalysts, like its hit movies and new Shanghai resort, make us bullish about the stock’s future. Eventually, we expect Disney to also turn its cable division around. That’s because we see major opportunity for Disney networks in the rapidly growing online streaming sector.

Up Next: The real reason Congress gets nothing done isn’t partisan gridlock. It’s that the primary duty of our elected representatives is no longer making laws – it’s this…

Follow us on Twitter @moneymorning and like us on Facebook.

Join the conversation. Click here to jump to comments…

Login
guest
guest
0 Comments
Inline Feedbacks
View all comments
LIVE
Visit Money Morning Live


Latest News

January 19, 2023 • By Money Morning Stock Research Team

These Stocks Could Go To $0

January 9, 2023 • By Money Morning Stock Research Team

The Government Is Pouring $391 Billion Into These Stocks - Buy Now

December 27, 2022 • By Money Morning Staff Reports

6 IPOs in 2023 You Can’t Afford to Miss
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Flashpoint Trader Darknet Hyper Momentum Trader Alpha Accelerators Weekly Profit Cycles Brutus Alerts

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz