Walt Disney Co is one of the few companies that is known to consistently deliver EPS higher than expected levels; the March quarter was one such quarter when it missed.

Analysts have a consensus EPS estimate of $1.61 for the third quarter, which was $0.01 higher than their predictions of $1.60 90 days ago. Disney will report its third quarter results after the market closes.

  • Analysts reporting to Thomson Reuters have forecast per-share earnings of $1.61, up more than 11% over the year-ago profit of $1.45 per share. 
  • Revenues are projected to climb better than 8% to $14.16 billion from $13.1 billion a year ago. 

There are few concerns among brokerages and investors that have the potential to upset the numbers. For instance, Zika could have affected the global travel to Disney World. Similarly, the cord-cutting is haunting the investors, as it was one year ago that ESPN fears crushed the stock. However, BTIG pointed out that the company was trying to ease the pressure by hiking the fees.

The underperformance of "The BFG" and "Alice Through the Looking Glass" have driven the brokerages to reduce their price tag and estimates.

However, the advantage that Disney enjoys is that if one division has pressures, the other supports. This was evident when FBR pointed out that the studio is enjoying at peak earnings this year at this point. Similarly, the company could gain from theme park driven by a fresh Avatar attraction in Animal Kingdom in Orlando apart from the ramp of Shanghai.


Studio Entertainment EBITDA Margin declined between 2007 to 2009 as the companies home entertainment as well as TV distribution revenues fell. However it has recovered in the past few years amounting to 33.6% in 2014. Going forward we expect further margin improvements as Disney revives its home entertainment revenues with greater emphasis on licensing of older content


Short-term options traders have priced in a 3% potential share price move in either direction around the earnings release.


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