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The Walt Disney Company (DIS - Free Report) is a Zacks Rank #5 (Strong Sell) that is a global leader in entertainment. The company is valued at over $214 billion and pays a dividend of 1.5%. The company is headquartered in Burbank, California and has 223,000 full time employees
Company Breakdown and COVID
The company’s Media Networks segment operates popular cable networks EPSN, Disney, Freeform, FX, National geographic as well as the ABC network. This segment accounts for about 35% of revenues.
The Studio Entertainment produces all the popular Disney movies and live action motion pictures, as well as musical recording and live stage plays. This segment is about 16% of revenues.
The Parks, Experiences & Consumer Products segment combines Parks and Resorts and their consumer products. The parks include the Disney theme parks all over the world, which help this segment produces 38% of the company revenue.
The Direct-to-Consumer includes Disney’s streaming services and the rest of the company’s revenues.
Looking at these segments, we can easily sniff out why there might be a problem with the Disney’s upcoming earnings on August 4th. With the parks, sports, and movies shut down over the last few months due to COVID-19, there will be a major hit to revenues. While streaming of Disney Plus and Hulu likely hit record number, that segment won’t fill the hole.
The question investors have to ask themselves is if the short-term pain is worth the long-term investment. Considering the stock has rallied 50% off its March lows and is struggling breaking technical resistance, buyers might want to wait for a better opportunity at lower prices.
COVID Troubles Persist
Economies have reopened and so have some of the parks, but there are concerns that a surge in cases, especially in Florida, might force shutdowns again. Even if they remain open, there is uncertainty on if people will consistently want to go with COVID-19 still in the air.
Cowen recently downgraded the stock citing parks and film disruptions are taking longer than initially hoped. The firm says valuation looks full on their new 2022 numbers.
Estimates are Falling
Analysts have taken down numbers drastically due to the lockdowns. Over the last 90 days, estimates have gone from $3.03 to $1.44 for the current year, a drop of 52%. The pain remains for next year, as estimates have fallen 26% over the same time period.
Technical Take
The stock rallied to the 200-day moving average at $128 and has since fallen back to support around he 50-day. Earnings will likely disappoint and we will see that support break, where the stock might head to test the $100 level. A long-term buy is warranted there.
In Summary
The mouse has a couple hurdles to get over before investors can get being the stock. Longer-term, Disney has an empire that will pay off once the pandemic is over. However, all signs point to a rough back half of the year for the company and the stock.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Bear of the Day: The Walt Disney Company (DIS)
The Walt Disney Company (DIS - Free Report) is a Zacks Rank #5 (Strong Sell) that is a global leader in entertainment. The company is valued at over $214 billion and pays a dividend of 1.5%. The company is headquartered in Burbank, California and has 223,000 full time employees
Company Breakdown and COVID
The company’s Media Networks segment operates popular cable networks EPSN, Disney, Freeform, FX, National geographic as well as the ABC network. This segment accounts for about 35% of revenues.
The Studio Entertainment produces all the popular Disney movies and live action motion pictures, as well as musical recording and live stage plays. This segment is about 16% of revenues.
The Parks, Experiences & Consumer Products segment combines Parks and Resorts and their consumer products. The parks include the Disney theme parks all over the world, which help this segment produces 38% of the company revenue.
The Direct-to-Consumer includes Disney’s streaming services and the rest of the company’s revenues.
Looking at these segments, we can easily sniff out why there might be a problem with the Disney’s upcoming earnings on August 4th. With the parks, sports, and movies shut down over the last few months due to COVID-19, there will be a major hit to revenues. While streaming of Disney Plus and Hulu likely hit record number, that segment won’t fill the hole.
The question investors have to ask themselves is if the short-term pain is worth the long-term investment. Considering the stock has rallied 50% off its March lows and is struggling breaking technical resistance, buyers might want to wait for a better opportunity at lower prices.
COVID Troubles Persist
Economies have reopened and so have some of the parks, but there are concerns that a surge in cases, especially in Florida, might force shutdowns again. Even if they remain open, there is uncertainty on if people will consistently want to go with COVID-19 still in the air.
Cowen recently downgraded the stock citing parks and film disruptions are taking longer than initially hoped. The firm says valuation looks full on their new 2022 numbers.
Estimates are Falling
Analysts have taken down numbers drastically due to the lockdowns. Over the last 90 days, estimates have gone from $3.03 to $1.44 for the current year, a drop of 52%. The pain remains for next year, as estimates have fallen 26% over the same time period.
Technical Take
The stock rallied to the 200-day moving average at $128 and has since fallen back to support around he 50-day. Earnings will likely disappoint and we will see that support break, where the stock might head to test the $100 level. A long-term buy is warranted there.
In Summary
The mouse has a couple hurdles to get over before investors can get being the stock. Longer-term, Disney has an empire that will pay off once the pandemic is over. However, all signs point to a rough back half of the year for the company and the stock.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>