Walt Disney Earnings Preview: Fiscal Second Quarter 2009

Walt Disney [[DIS]] is scheduled to report their fiscal second quarter 2009 results after the market closes on Tuesday, May 5. Based on our analysis, we at EarningsPreviews.com are expecting DIS to report disappointing results that fail to meet Wall Street’s consensus expectations.

 

Analyst Expectations

We are forecasting revenues of $8.01 billion and EPS of $.39. This would represent an 8% decline in revenues from last year’s $8.71 billion in the same period. The current analyst consensus estimates calls for revenues of $8.15 billion and EPS of $.41.

 

Wall Street continues to reduce their earnings estimates as expectations for Disney’s fiscal second quarter performance continues to fall. The company has been forced to implement aggressive promotional pricing in recent months to attract visitors to their theme parks. While this has helped to keep attendance from falling dramatically, we expect that it will negatively impact quarterly earnings.

 

Share Performance

Since the beginning of the year, Disney’s shares are down almost 14%. In 2008, Disney’s shares fell less than 30% as the stock barely outperformed the 34% decline in the Dow Jones index.

 

Valuation

Shares are now trading at 10x consensus 2010 EPS estimates. This is below the relative valuations of their peer group. While Disney’s shares appear to be trading at a compelling valuation, we expect the company to struggle in the coming quarter which will have a further negative impact on their share price.

 

Recommendation: Sell with a $17 price target.

 

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