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Time to Tap Disney ETFs Post Earnings?

Sanghamitra Saha
Eric and Danny Buy Disney and Square Inc. For Their First Stock Holdings.

Walt Disney Company (DIS) came up with its Q1of fiscal 2019 results after close of trading hours on Feb 5 by beating both earnings and revenue estimates (see: all the Consumer Discretionary ETFs here).

Disney recently reorganized its business reporting segments. The company’s new reporting segments include Media Networks, Studio Entertainment, Parks, Experiences & Consumer Products and Direct-to-Consumer & International (DTCI).    

Earnings in Focus

Adjusted earnings of $1.84 per share comfortably beat the Zacks Consensus Estimate of $1.57. However, the figure declined 2.6% from the year-ago quarter.

Revenues of $15.30 billion remained almost flat from the year-ago quarter. The figure surpassed the consensus mark of $15.18 billion. Rising sales and profit at the ABC network and local TV stations helped Disney beat analysts’ forecasts for the first quarter -- and mitigate another tough quarter for the ESPN sports network, per Bloomberg.

Outlook

Disney has warned that fiscal 2019 will be a tough year as the company takes over most of 21st Century Fox Inc. and develops programs for three online video services: ESPN+, Disney+ and Hulu. However, its wide diversification in business is likely help the company to lower any specific restructure-oriented threat to the company.

Market Impact

The stock has a Zacks Rank #3 (Hold) and it comes from a top-ranked Zacks industry (top 19%).  Shares remained almost flat in the past five trading sessions, having lost about 0.5% (as of Feb 8, 2019).

ETFs in Focus

The rally in the company’s stocks will spread into the ETF world, especially funds that have the largest allocation to this media and entertainment conglomerate.

iShares Evolved U.S. Media and Entertainment ETF (IEME)

The actively managed fund seeks to provide access to U.S. companies with media and entertainment exposure. The fund takes the top spot in the fund with about 6.69% of the fund. The $5.2-million fund charges 18 bps in fees.

Invesco Dynamic Leisure and Entertainment ETF PEJ

The fund tracks the Dynamic Leisure and Entertainment Intellidex Index and comprises 30 holdings. Walt Disney (5.03%) occupies fourth spot in the fund pool. The fund’s AUM is $91.8 million and expense ratio is 0.63% (read: Starbucks Posts Strong Q1 Earnings: ETFs to Watch).

Invesco Dynamic Media ETF PBS

The fund tracks the Dynamic Media Intellidex Index comprising 30 U.S. media companies, of which Walt Disney represents 4.8% -- the sixth highest position. The fund has AUM of $61.8 million and an expense ratio of 0.63%.

iShares U.S. Consumer Services ETF (IYC)

The fund looks to track the Dow Jones U.S. Consumer Services Index. The stock holds the fourth position with about 4.78% exposure (read: Longest U.S. Government Shutdown: Likely ETF Winners & Losers).

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iShares U.S. Consumer Services ETF (IYC): ETF Research Reports
 
Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
 
Invesco Dynamic Media ETF (PBS): ETF Research Reports
 
iShares Evolved U.S. Media and Entertainment ETF (IEME): ETF Research Reports
 
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