Disney DIS is a stock Wall Street will be watching closely this week with the media conglomerate set to release results for its fiscal fourth quarter on Thursday, November 14.
With Disney shares up a respectable +13% year to date, investors may be wondering if there is more upside ahead as earnings approach.
Disney’s Q4 sales are expected at $22.59 billion, a 6% increase from $21.24 billion in the comparative quarter. More intriguing, Disney’s cost-saving initiatives appear to be working with Q4 earnings projected to increase 33% to $1.09 per share versus EPS of $0.82 a year ago.
Exceeding earnings expectations for seven consecutive quarters, Disney has posted an impressive average EPS surprise of 18.01% in its last four quarterly reports. Disney has exceeded top line estimates in two of the last four quarters with an average sales surprise of 1.05%.
Image Source: Zacks Investment Research
Reductions to its workforce and reduced operating costs among its streaming segments have been the main catalyst for Disney’s increased probability.
EPSN+ subscribers are expected at 25.73 million with Disney+ users forecasted at 120 million. However, Disney+ subscribers would reflect a noticeable dip from the 150 million paid members in the same period last year. Still, when including Hulu subscribers which are projected at 51 million, Disney is edging toward 200 million total streaming memberships.
This is second to streaming leader Netflix NFLX who recently reported over 280 million paid memberships in October.
At around $102, Disney’s stock trades at 19.2X forward earnings which is a nice discount to the S&P 500’s 25.3X and Netflix’s 41.4X.
Furthermore, DIS trades at the optimum level of less than 2X sales compared to the S&P 500’s 5.4X and Netflix’s 9X.
Image Source: Zacks Investment Research
Disney’s Q4 results will be crucial to reconfirming the company’s return to growth as its stock currently lands a Zacks Rank #3 (Hold). That said, long-term investors could certainly be rewarded given Disney’s appealing valuation with the Average Zacks Price Target of $114.92 a share suggesting 14% upside for DIS.
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
The Walt Disney Company (DIS) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Add Comment