Walt Disney (DIS) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Walt Disney (DIS) closed the most recent trading day at $124.95, moving +0.58% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.47%. Meanwhile, the Dow gained 0.4%, and the Nasdaq, a tech-heavy index, added 0.33%.

Heading into today, shares of the entertainment company had lost 0.94% over the past month, lagging the Consumer Discretionary sector's gain of 1.18% and the S&P 500's gain of 3.42% in that time.

Investors will be hoping for strength from DIS as it approaches its next earnings release, which is expected to be November 12, 2020. On that day, DIS is projected to report earnings of -$0.60 per share, which would represent a year-over-year decline of 156.07%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.38 billion, down 24.7% from the year-ago period.

Investors should also note any recent changes to analyst estimates for DIS. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.94% lower. DIS is currently sporting a Zacks Rank of #4 (Sell).

Valuation is also important, so investors should note that DIS has a Forward P/E ratio of 41.8 right now. For comparison, its industry has an average Forward P/E of 30.21, which means DIS is trading at a premium to the group.

It is also worth noting that DIS currently has a PEG ratio of 6.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Media Conglomerates industry currently had an average PEG ratio of 6.24 as of yesterday's close.

The Media Conglomerates industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 208, putting it in the bottom 18% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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