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Disney Q4 Earnings Preview: DIS to Beat Expectations?

By:Thomas Westwater

Disney profits are about to come into focus as investors eye a streaming acquisition and a proxy battle

  • Disney fourth quarter fiscal results are due Nov. 8.
  • Observers expect earnings per share (EPS) of $0.69 on $21.42 billion in revenue.
  • A proxy battle remains a distraction for shareholders.

Disney (DIS) is scheduled to release fiscal fourth quarter and full-year results on Wednesday, Nov. 8, after the closing bell. An investor webcast will take place at 4:30 p.m. EST, according to a Disney press release.

Disney Q4 earnings: What do investors expect?

Investors anticipate Disney’s earnings per share (EPS) will cross the wires at $0.69 on an adjusted basis and $0.56 on a GAAP (generally accepted accounting principles) basis. The consensus revenue figures stand at $21.42 billion, while adjusted net income and operating profit expectations call for $1.31 billion and $2.61 billion, respectively.

Over the last four weeks, EPS expectations have softened slightly, but the stock price managed to rise 0.67% in October as the S&P 500 posted a decline of nearly 3% amid a risk-off move. That suggests Disney still holds some flight-to-quality attributes for investors.

Investors are also looking for some fruit from its efforts to cut streaming losses after tightening spending and pushing its ad-supported plans. Yesterday, Disney announced it would acquire Comcast’s (CMCSA) 33% stake in Hulu in a push to further its objectives in the streaming business, according to a company presser. Disney expects to pay $8.61 billion, with a completion data in 2024.

Trouble in the background for Disney as proxy fight heats up

Meanwhile, distractions remain for Disney CEO Bob Iger. Activist hedge fund manager, Nelson Peltz, has upped the pressure on his campaign to gain more control of the board. Former Marvel Entertainment Chair and CEO Ike Perlmutter has entrusted his stake to Peltz’s Trian Fund Management.

Perlmutter was ousted in the last round of layoffs, but he remains one of the largest single shareholders and he is not happy with the recent direction of the company. This topic will likely be discussed during the webcast, as it remains a distraction for shareholders.

Trading Disney earnings

Disney was up over 2% today as the S&P 500 rallied after the November Federal Open Market Committee (FOMC) policy announcement. Currently, Disney holds an implied volatility rank (IVR) of 44.4 and the expected move per the Nov. 10 options strike is at about +/- 5 points.

For traders who want to take a neutral to bullish stance, selling a put spread is one option that offers some premium. Recent bottoms on the chart around the 79 level align a short put spread trade with a technical setup that may prove fruitful.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater 

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