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The Walt Disney Company's (DIS) Q1 EPS Preview: Watching ESPN

 February 04, 2013 02:46 PM

(By Rich Bieglmeier) The Walt Disney Company's (DIS) financial results for the first quarter 2013 will be reported on Tuesday, February 5, 2013 at approximately 4:15 p.m. EST. Wall Street anticipates that DIS will earn $0.76 for the quarter. iStock expects the entertainment company to report earnings that will top Wall Street's consensus number. The iEstimate is $0.77, a $0.01 upside surprise.

Like you don't know, but Disney Company operates as an entertainment company worldwide. DIS operates the ABC, ESPN Television Network and 8 owned television stations, the ESPN Radio Network and Radio Disney Network, and 35 owned and operated radio stations and famous for its Parks and Walt Disney World Resort in Florida, as well as the Disneyland Resort in California.

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For the most part, Disney has delivered 4 and 5 star earnings in the past four years. The Dow member has topped Wall Street's consensus view 12 of last 16 earnings announcements by an average of 10.19%. Meanwhile, bottom line profits fell short three times with an average miss of 12.45% and hit the bulls' eye once.

While earnings have mostly stuck to the script, share price performance has drawn mixed reviews. The stock price gave up ground in the days surrounding earnings in seven of the last 16 quarters, losing an average of  4.21% with a range of -0.40% to -8.50%. On the head of the coin, DIS bulls bid up the stock by an average of 5.21% with a range of 0.2% to 16.30%.

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The two biggest slices of Disney's pie are Media Networks and Parks and Resorts. The combo accounts for 76.5% of Disney's revenue. According to Nielsen, TV live viewing has remained relatively constant, in the neighborhood of 4 hours and 23 minutes a day. Wow, do people really watch that much TV.

The biggest cash cow is ESPN for Disney networks. According to TVbythenumbers.com, week in and week out ESPN is "yet again Number One in Cable Primetime for Adults 18-49 & Primetime Total Viewers." In Q4, revenue for the division grew by 4%, and we'd expect to see something similar on Tuesday night.

As we do when it makes sense, iStock turned to Google Trends to see if we can pick up any clues on the quarter. We punched in the keywords "Disney World Tickets" and "Disneyland Tickets" to see how search trends compare year-over-year and quarter-over-quarter.

From the fourth to the first quarter, search trends for World were down 8% and Land up 13.2%. Compared to Q4 2011, queries were down 15% for the California theme park and flat YoY for Orlando, Florida.

Last year, The Walt Disney Company's (DIS) earned 80 cents for the first quarter. Based on theme park Google Trends and ESPN's dominate TV position, although slipping a bit, iStock believes our iEstimate could prove to be a penny or two light. The key will be management's ability to hold rising costs at ESPN in check. 

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