DISNEY Earnings due today – Should you buy or sell?

Walt Disney Inc. (NYSE: DIS) is all set to report its earnings today, 10th May after market hours. The earnings report will be for the fiscal quarter ending March 2016. The street expects Disney’s EPS for the quarter at $1.40 – $1.39. In the same period last year, Disney’s EPS was $1.23, so today’s earnings if matches estimates could see a 13% increase compared to the same quarter last year. On May 9th close, Disney’s shares were down 0.19%, trading at 105.34 after posting an 18-week high at 106.68.

Disney’s EPA for 2016 is 13.22%, above the industry average (Media) of -2.40%, while price to earnings is 18.10, slightly below industry average of 19.80.

DISNEY – Key Fundamentals

Of interest in today’s earnings will be the following:

  • Revenue: Analysts expect Disney to report $13.4 billion in revenue for the quarter, which will be an increase from $12.5 billion last year with media networks expected to contribute $5.9 billion.
  • Share Price: On a year to date basis, Disney’s shares are up 0.20%. Analysts have given Disney a moderate buy rating with a 12-month target price of $111.50 for the stock, which is a 6% premium from the current levels.
  • Succession Plans: Who will take over as the next CEO of Disney? That has been a topic of debate among analysts after the surprise exit from Tom Staggs, who was the heir apparent.

The hedge fund community has sold nearly 280.6k shares in the last quarter with a negative sentiment.

Hedge Funds Holdings in Disney QoQ change (Q1 – 2016)
Hedge Funds Holdings in Disney QoQ change (Q1 – 2016)

Trading DIS Stock ahead of earnings – DISNEY, Technical Analysis

Price closed with a dark cloud cover pattern on the daily chart yesterday and the trend remains to the upside with DIS making higher highs. The psychological 100 level acted as support since March this year and this resistance was broken around April 18th pushing prices to an 18-week high. Disney’s 52-week high is at 122.08

The daily chart shows the current uptrend after breaking the 100 level forming an ascending wedge pattern. There is no doubt that at some point, Disney will have to retest the 100 level to establish support ahead of further upside. As of yesterday, May 9th, 2016, Disney has failed to close above this year’s high of 105.60, despite yesterday opening higher at 106.01 but closing at 105.34

Immediate Support: 100

Resistance: 108

Lower Support: 96

Technical Outlook: The ascending wedge following the breakout above 100 resistance could see a retest to establish support at this level. But a support failure at 100 could see Disney fall to the lower support at 96, in which case, 100 could turn to resistance. If 100 support holds, next target would be 108.

Disney (DIS: 105.34) – Technical Chart, May 2016
Disney (DIS: 105.34) – Technical Chart, May 2016

On the 15-day chart, Disney is into its third month of gains following the doji pattern in February this year which saw prices fall to lows of 86.25. The long term view on the chart indicates that Disney could possible slip towards 90, over the period of the next 3 – 6 months unless we see a strong move above 108. There is also a possible bullish pennant pattern taking shape which could see a strong upside rally should prices break above 108 and clears 120 which has acted as a strong resistance.

DISNEY – 15 Day Chart, Bullish Pennant
DISNEY – 15 Day Chart, Bullish Pennant

Walt Disney Inc – Where to trade?

You can trade Disney CFD’s at Deltastock which requires a 5% margin with a 3.50% swap on long positions at -2.50% swap on short positions. Open a new Deltastock account here.

AvaTrade.com allows you to trade Disney stocks with a 10% margin and a 2.50% negative swap on Buy or Sell. Open a new Avatrade account here.

Liteforex.com ECN accounts offer Disney CFD trading with a positive swap on shorts and negative swaps on long positions. Open a new Liteforex account here.

Walt Disney Inc – Trading Plan

Short positions are recommended at market open for a target of $100. For regular trading, this could be risky as an up gap on May 11th open could put the positions at risk. We therefore recommend Binary options. BinaryBrokerz.com offers options trading for Disney which offers a 75% return on investment.

Purchase PUT Options with a $100 investment and an end of week expiry time for the contract.

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