Disney Earnings Preview: Hannah vs. Mickey (DIS)

After today’s close, we’ll get to see earnings out of the Mouse House from Walt Disney Co. (NYSE: DIS).  First Call has estimates of $0.61 EPS on $9.14 Billion in revenues for this quarter.  Estimates are $0.52 EPS and $9.37 Billion next quarter and are coming in at $2.32 EPS on roughly $37.7 Billion for its Fiscal September-2008.  As you will see below, there are some very critical levels to watch today.

Disney stock has been one of the DJIA components that technically hasbeen dead money since the start of 2007 with shares down about 10%since then.  Considering the economic environment, its business hasactually remained healthy.  You can point to many areas, but thecurrent media attention is geared more and more towards Hannah Montanawhile the rest of its business has been holding up well.  Oneinteresting aspect of this stock is that some are even starting toconsider its theme park business a beneficiary if gasoline pricescontinue coming back in.

Analysts have an average target price of nearly $38.00, which is stillmore than 20% above today’s current prices around $31.00.  Its 52-weektrading range is $26.30 to $35.69.

Options traders aren’t looking for any major surprises in eitherdirection, as a review of in the money and out of the money currentmonth options points to traders bracing for a move of up to 4% ineither direction.

A chart review is interesting here.  A couple weeks ago we saw a dipdown to $28.50 before a recent bounce has lost at least some of itssteam just north of $31.00.  But on a longer basis you need to watchthe key moving average levels.  The 200-day and 50-day moving averagesmake $32.00 moire than critical as the 50-day is $32.00 and the 200-daymoving average is $32.05.  These two levels just recently converged aswell.

Jon C. Ogg
July 30, 2008