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Disney (DIS) to Report Q4 Earnings: What's in the Cards?

Disney DIS is set to report fourth-quarter fiscal 2019 results on Nov 7.

The Zacks Consensus Estimate for earnings has declined by a couple of cents to 95 cents over the past 30 days. The figure indicates a decline of 35.8% from the year-ago quarter’s reported figure.

The consensus mark for revenues is pegged at $19.03 billion, implying growth of 33% from the year-ago period’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 2%.

In second-quarter fiscal 2019, earnings of $1.35 per share lagged the Zacks Consensus Estimate by 41 cents. The figure decreased 27.8% from the year-ago quarter.

Revenues jumped 32.9% from the year-ago quarter to $20.25 billion. However, the figure lagged the consensus mark of $21.68 billion.
 

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.

Factors to Consider

Disney’s fourth-quarter fiscal 2019 top line is expected to have benefited from strong box-office collections of The Lion King (released on Jul 19). The movie raked in $1.65 billion to date, per data from Box Office Mojo.

Other notable releases of the company include Ready or Not, The Art of Racing in the Rain and Ad Astra.

The Zacks Consensus Estimate for Studio Entertainment revenues is currently pegged at $3.15 billion, suggesting a surge of 46.6% from the figure reported in the year-ago quarter.

Moreover, Disney’s profitability in the quarter to be reported is likely to reflect ongoing investments in direct-to-consumer (DTC) businesses that now include Hulu, ESPN+ and the upcoming Disney+ streaming service.

For fourth-quarter fiscal 2019, Disney expects the DTC & International segment to report roughly $900 million in operating losses, increasing almost $560 million year over year.

The Zacks Consensus Estimate for DTC & International/Consumer Products operating income is currently pegged at a loss of $764 million.

Key Q4 Developments

During the quarter, as required by the regulators, Disney sold the 22 regional sports networks (RSNs) it got from the Fox acquisition. Sinclair Broadcasting bought 21 of these RSNs, while a group of investors, including Sinclair and Amazon, bought the big YES Network (Yankees Entertainment and Sports Network).

Moreover, Disney and Microsoft inked a five-year partnership to create new ways for “production” and “post-production” workflows via the Microsoft Azure cloud platform. The tech giant will support Disney as an innovation partner to bolster the StudioLAB (SLAB) initiative.

What Our Model Says

According to the Zacks model, a company with a positive Earnings ESP along with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. But that is not the case here.

Disney has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of +0.53%. 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:

Activision Blizzard ATVI has an Earnings ESP of +24.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

iHeartMedia IHRT has an Earnings ESP of +3.17% and a Zacks Rank #2.

Fox Corporation FOXA has an Earnings ESP of +2.97% and a Zacks Rank #3.

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

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