Markets
DIS

Can Disney (DIS) Keep its Earnings Streak Alive in Q4?

Entertainment giant, The Walt Disney CompanyDIS is expected to report fourth-quarter fiscal 2015 earnings on Nov 5, 2015. The big question facing investors now is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, Disney has outperformed the Zacks Consensus Estimate by an average of 8.5%. Let's focus on the determinants of the fourth-quarter results:

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Disney is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Disney has an Earnings ESP of -3.42% as the Most Accurate estimate of $1.13 is lower than the Zacks Consensus Estimate of $1.17. Disney's Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Factors Influencing This Quarter

Disney's Studios segment is expected to deliver robust revenue as the company has been tasting all success at the box office this year and has already crossed the $4 billion mark. Till Oct 7, 2015 Disney collected $1.4 billion from U.S. and Canada and $2.575 billion from the overseas market. Disney has touched the $4 billion mark for three consecutive years. This is the tenth successive year in which the studio has exceeded the billion dollar mark.

However, the story isn't so rosy in its media business. The company has been laying off employees at ESPN, including many of its top tier on-air talent, in order to try and trim costs as the cable landscape changes.

For some time now, Disney's primary cash cow ESPN has come under a lot of pressure as the Pay TV landscape continues to alter owing to migration of subscribers to online TV. Falling subscriptions will have a telling effect on the network's ad revenues. ESPN reported 3% decline in advertising revenues for the third quarter of fiscal 2015.

Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Facebook, Inc. FB has an Earnings ESP of +5.71% and a Zacks Rank #1 (Strong Buy).

Nexstar Broadcasting Group, Inc. NXST has an Earnings ESP of +14.29% and a Zacks Rank #2.

Time Warner Inc. TWX has an Earnings ESP of +0.92% and a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TIME WARNER INC (TWX): Free Stock Analysis Report

DISNEY WALT (DIS): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

NEXSTAR BRDCSTG (NXST): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

DIS FB NXST

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More