Financial Trading Blog
Stock of the day 04/08/2016 – The Walt Disney Co
Although Disney’s year hasn’t been as choppy as it was in 2015, the stock has seen more volatility than it would have liked. Starting January at $102.58 (compared to the $122.08 all-time high it hit at the beginning of August 2015) Disney had plunged to a 16 month nadir of $86.29 by the middle of February. Since then the stock has settled somewhat, largely trading between $95 and $100, the expectation being a relatively brief adventure to a year peak of $106.75 back in May. Walt Disney sits at a current trading price of $96.07 (IT-Finance.com, 04/08/2016).
(Source: IT-Finance.com 04/08/2016)
Disney released its first update of the year in February, smashing expectations thanks to a Star Wars-inspired 14% surge in Q1 revenue to $15.24 billion alongside an even more impressive 28% rise in EPS to $1.63 (against the $1.45 forecast). Yet all this was overshadowed by an ESPN-led 5% fall in operating income for its cable networks, currently the most pressing concern for Disney investors due to the fact they comprise over 30% of the company’s total operating income, helping send the stock the that aforementioned 16 month low.
Flash forward to May’s second quarter results and Disney didn’t even have those headline figures to rely upon. Earnings per share missed expectations at $1.36 against the $1.40 estimated, as did revenue, which came in at $12.97 billion against the $13.19 billion forecast; Disney also announced a $147 million hit arising from the cancellation of its Infinity video game franchise. The media network figures also missed targets, though operating income did rise 9% to $2.3 billion.
In terms of the company’s Q3 results analysts are expecting Disney to post an 11% rise in earnings per share to $1.61 alongside an 8% surge in revenue to $14.17 billion. However, these headline figures may all be for nought if Disney can’t sufficiently assuage investors’ fears over its cable, i.e. ESPN, arm.
The Walt Disney Co has a consensus rating of ‘Hold’ with an average target price of $109.66.
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