The earnings calendar may seem full this week … that is, if you look only at the number of companies on the list. But “quality” is lacking, with the exception of Cisco Systems (NASDAQ:CSCO) and a few of the major department store names.
But one major Dow Jones Industrial component (along with Cisco) on the list this week is The Walt Disney Company (NYSE:DIS), which reports Thursday after the close. Analysts expect 54 cents per share, a 20% increase compared to a year ago. That’s a bit higher than the average 15% growth the company has sported for the past four quarters, so the Mouse has some work to do.
DIS has a decent, but hardly stellar, record of beating earnings estimates. Four misses in the past three years can give one pause, especially in a skittish market environment.
There’s no doubt that DIS owns great franchises – ESPN, Pixar, Marvel and the Disney name itself. But revenue growth and stock performance have been sluggish, perhaps as a reflection of the overall economy.
On the charts, the stock has lagged the broader market for most of the year. In fact, the stock is down around 7% for the year, and is currently struggling with its declining 100-day moving average near the $35 level.
Not coincidentally, call open interest in the November series is heaviest at the $34 and $35 strikes, which adds to the resistance the stock is battling.
Sentiment toward DIS is unremarkable, although one could argue that it’s too optimistic for a stock that’s lagging.
Short interest has been at the low end of the range for the past couple of years, while the put/call ratio is in the middle of the 2011 range. Seventeen of 29 analysts consider the shares a “Buy,” a configuration that’s unchanged from three months ago.
With plenty of overhead resistance and ample optimism to unwind into selling, DIS does not have the look of a stock ready to pop after earnings. The company needs a blowout to break out of its funk, and the odds of such a report appear unlikely.
Over the long run, DIS should be in fine shape once the economy here and globally starts humming. For now, though, look for the stock’s weakness to continue into the end of the year. Buy the DIS Dec 35 Put for around two bucks.