What’s Wrong With Walt Disney Co (DIS) Shares? Earnings Beat, Stock Drops

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It has been quite an odd earnings season for many of the larger companies this last quarter. While earnings are actually quite strong this quarter, beating many estimates, the stocks which go with these earnings seem to be struggling. Take for instance Walt Disney Co (NYSE:DIS), who reported after the bell yesterday. While they beat analyst estimates by a wide margin on both the top and bottom lines, reporting an EPS of $1.63 on $15.24 billion in revenue for their fiscal first quarter, the stock is down $2.96 or 3.2% in pre-market trading this morning.

“Our results clearly show that our long-term strategic focus and investments in brands and franchises are driving remarkable value in these businesses, greatly increasing their impact on the company, and further diversifying our future growth,” said Disney Chairman and Chief Executive Robert Iger.

While the company’s ‘Star Wars: The Force Awakens’ blockbuster propelled them to record earnings, it’s their TV business which continues to struggle, overpowering the success of their film division, at least in the minds of investors. These concerns are exacerbated by the fact that Walt Disney’s (NYSE:DIS) latest contract with the NFL for Monday Night Football now costs them $1.9 billion annually. This is 72% higher than the previous contract signed just under three years ago.

The stock increased 0.31% or $0.29 during the last trading session, hitting $92.41. About 30,102 shares traded hands. DIS has declined 21.16% since July 7, 2015 and is downtrending. It has underperformed the S&P500 by 12.29%.

From a total of 22 analysts covering The Walt Disney Company (NYSE:DIS) stock, 11 rate it a “Buy”, 1 a “Sell”, and 10 a “Hold”. This means that 50% of the ratings are positive. The highest target price is $136 while the lowest target price is $10.55. The mean of all analyst targets is $118.12 which is 27.82% above today’s ($92.41) stock price. The Walt Disney Company was the topic of 43 analyst reports since July 24, 2015 according to the firm StockzIntelligence Inc. Barclays Capital downgraded shares on January 15 to a “Underweight” rating. Credit Suisse maintained shares with a”Outperform” rating and a $130 target share price in their report from a November 10. Macquarie Research downgraded DIS stock in a recent report from January 5 to a “Neutral” rating. Pivotal Research initiated the rating on October 20. Pivotal Research has a “Hold” rating and a $106 price target on shares. Finally, Topeka Capital Markets maintained the stock with a “Buy” rating in a report they issued on a November 19.

The institutional sentiment increased to 1.33 in Q2 2015. It’s up 0.15, from 1.18 in 2015Q2. The ratio increased, as 101 funds sold all their Walt Disney Co shares they owned while 548 reduced their positions. 116 funds bought stakes while 748 increased their total positions. Institutions now own 1.00 billion shares which is 2.38% less than the previous share count of 1.03 billion in 2015Q2.

Winch Advisory Services Llc holds 15.54% of its total portfolio in Walt Disney Co, equating to 104,034 shares. Rit Capital Partners Plc owns 509,000 shares representing 12.14% of their total US portfolio. Moreover, Lindsell Train Ltd has 11.54% of their total portfolio invested in the company, equating to 1.65 million shares. The New York-based Klingenstein Fields & Co Llc has a total of 10.54% of their portfolio invested in the stock. Tukman Grossman Capital Management Inc, a California-based fund reported 1.76 million shares owned.

Since March 6, 2015, the stock had 0 insider purchases, and 1 insider sale for a total of $611,822 in net activity. Chen John S sold 6,000 shares worth $611,822. Braverman Alan N sold 18,473 shares worth $2.19M. Woodford Brent sold 2,000 shares worth $237,000. Matschullat Robert W sold 2,965 shares worth $324,545. The insider Lozano Monica C sold 397 shares worth $43,948.

The Walt Disney Company, incorporated on July 28, 1995, together with its subsidiaries and affiliates, is a diversified international family entertainment and media enterprise with five business divisions: media networks, parks and resorts, studio entertainment, consumer products and interactive media. The company has a market cap of $148.83 billion. Media Networks comprise an array of broadcast, cable, radio, publishing and digital businesses across two divisions the Disney/ABC Television Group and ESPN Inc. It has 18.86 P/E ratio. Walt Disney Parks and Resorts is a well-known provider of family travel and leisure experiences.