Disney Crafts New High

Zacks Equity Research

Shares of The Walt Disney Company (DIS) reached a new 52-week high of $60.73 on Friday, Apr 12, gaining momentum from the company’s healthy outlook for the upcoming second quarter of fiscal 2013.

Disney earlier stated that its ad sales, domestic resort reservations and booking rates are witnessing a healthy trend, which in turn is expected to boost the quarterly results of the company.

Further, Disney continues to invest in its core businesses to create long-term growth opportunities. It entered into several content distribution agreements with companies like Comcast Corp (CMCSA), Netflix Inc. (NFLX), Charter Communications Inc. (CHTR) and Cox Communications, which strengthen its multichannel subscription model by adding more platforms to deliver its content. The company remains focused on generating increased income from affiliate deals and retransmission renewals.

Moreover, strong performance of its Media Networks division continues to boost the top and bottom line results. Going forward, management remains confident of a sturdy performance by ESPN as it remains the favorite destination of sports lovers and possesses the right mix of exclusive sporting licenses with top sporting leagues.

Our proven model shows that Disney may beat the earnings estimate because it has the right combination of two key components – Positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #2.

Disney currently has an Earnings ESP of +2.63%. This is because the Most Accurate Estimate stands at 78 cents, while the Zacks Consensus Estimate is pegged at 76 cents.

The combination of Disney’s Zacks Rank #2 (Buy) and Earnings ESP of +2.63% make us confident regarding a positive earnings beat by the company.

Disney is slated to report its second-quarter fiscal 2013 results on May 7, 2013. Shares of this media and entertainment giant have risen approximately 18.5% year to date. Disney currently trades at a forward P/E of 17.57x, a 8.7% premium to the peer group average of 16.17x.

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