Disney Sells Off on Earnings Beat, CROX Stomps Estimates

Tuesday, May 7th, 2024

Markets continue to perform relatively well off lows from mid-last week. These lows were higher than the previous divot in mid-April, and this spells a good trend to this point. Minus large-scale economic reports this week, attention will necessarily turn to the remainder of earnings reports yet to come out. The Dow is up +30 points at this hour — riding a 4-day winning streak by the way — with the S&P 500 +5 points but the Nasdaq -13. The S&P and Nasdaq currently have 3-day winning streaks.

The Walt Disney Co. DIS is out with fiscal Q2 numbers this morning. Earnings of $1.21 per share outperformed the Zacks consensus by 9 cents for a +8% positiver surprise, on in-line revenues of $22.1 billion in the quarter. This marks the 6th-straight quarter posting a positive earnings surprise for the global entertainment conglomerate, with full-year earnings guidance ratcheting up slightly from previous expectations.

Shares of Disney are down in the early trading session, however. The -8% sell-off may have something to do with a weaker box office draw in the quarter, although that was expected. Its Direct-to-Consumer (DTC) business posted positive operating income for the first time, but is expected to slow a bit in the ongoing quarter. Parks brought in $1.61 billion, higher than expected, but also anticipated to pull back somewhat in Q3. Disney+ added 6 million new subscribers in the quarter, well ahead of estimates.

Also consider Disney’s recent valuation. The stock had risen an impressive +28% year to date going into this morning’s print, so from that perspective it looks like a clear “sell the news” move. CEO Bob Iger is talking on the conference call at this hour, and we will keep a close eye on Disney shares as the regular trading day begins. Pulling back focus a moment, that +28% valuation growth since the start of the year was mostly filling in for a weaker 2023. For more on DIS’ earnings, click here.

Colorado-based footwear company Crocs CROX beat estimates for Q1 this morning. Earnings of $3.02 per share represents a +34% surprise over the $2.25 expected, swinging to a profit from an expected loss year over year. Quarterly sales of $938.63 million easily surpassed the $882.60 million in the Zacks consensus, also swinging to a positive year over year. Shares are up +2.5% in early trading, adding to the company’s strong +35.6% year to date.

Pre-market futures have continued to thaw. We are now positive on the Dow (+74 points), S&P (+8 points) and Nasdaq (+5) at this hour, with a gently bullish sentiment accompanying a continued decent series of calendar Q1 reported earnings results. Minneapolis Fed President Neel Kashkari makes a public appearance later this morning, with a Consumer Credit report out this afternoon. After the close, we look toward the first public quarterly earnings report from Reddit RDDT, along with Twilio TWLO, Wynn Resorts WYNN and more.

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Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report

The Walt Disney Company (DIS) : Free Stock Analysis Report

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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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