The Walt Disney Co. (NYSE:DIS) is set to report FQ1 2014 earnings after the market closes on Wednesday, February 5th. Disney is an American media company most well known for Walt Disney Studios, but also owns ESPN, A+E and ABC Networks. Estimates for Disney's latest animated film, Frozen, are high as the film has already grossed $864 million globally. Analysts are expecting 15% year over year profit growth for Disney in part due to Frozen and Thor: The Dark World films as well as the hit video game "Disney Infinity". Theme parks and football broadcasting are also both expected to be sources of growth for Disney this quarter. Here's how investors expect Disney to report on Wednesday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Disney to report 91c EPS and $12.278B revenue while the current Estimize.com consensus from 29 Buy Side and Independent contributing analysts is 91c EPS and $12.289B revenue. This quarter the buy-side, as represented by the Estimize.com community, is expecting Disney to match the Street's expectations on profit and beat on revenue by a small margin.
Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Disney's profit and revenue 3 times each. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller differential compared to recent quarters.
The distribution of estimates published by analysts on the Estimize.com platform range from 85c to $1.00 EPS and $11.847B to $12.5B in revenues. This quarter we're seeing a larger distribution of estimates on profit compared to previous quarters.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter the EPS estimate from Wall Street increased from 89c to 91c and the Estimize community raised its consensus from 88c to 91c. Wall Street raised its revenue consensus from $12.269B to $12.278B while the Estimize forecast fell from $12.301B to $12.289B. Timeliness is correlated with accuracy and rising analyst EPS expectations are often a bullish indicator. Over the past three months we've also seen converging revenue expectations between the two groups.
The analyst with the highest estimate confidence rating this quarter is anmikyoso who projects 85c EPS and $12.142B in revenue. In the Winter 2014 season, anmikyoso rated as the 29th best analyst and is ranked 29th overall among over 3,700 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case anmikyoso is making a bearish call, expecting Disney to miss Wall Street expectations on both profit and revenue.
This quarter analysts on the Estimize.com platform have similar expectations to Wall Street. Contributing analysts are expecting Disney to report in line with Wall Street on profit, but exceed slightly on revenue. Although Disney stock price has been sliding, a stronger than expected earnings report could get shareholder value unfrozen.
Disclosure: No positions