Will Walt Disney Stock Lift After Its Forthcoming Earnings?
The company has also intensified its efforts against password sharing, aiming to convert shared users into paying customers by implementing an extra-member fee starting at $7 per month. Additionally, Disney's experiences segment has been performing well lately, driven by strong attendance at its U.S. parks and increased capacity in the cruising segment, which welcomed the Disney Treasure cruise ship into service late last year.
The company boasts a current market capitalization of $218 billion. Revenue for the past twelve months was $94 billion, and it recorded operational profitability, with $14 billion in operating profits and a net income of $8.9 billion. While much will depend on how results compare to consensus and expectations, understanding historical trends may turn the odds in your favor if you are an event-driven trader.
There are two approaches to achieve this: understand historical probabilities and position yourself before the earnings release, or analyze the correlation between immediate and medium-term returns following earnings and position yourself accordingly after the earnings are announced. That being said, if you're looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio serves as an alternative – having outperformed the S&P 500 and achieved returns exceeding 91% since its inception.
See earnings reaction history of all stocks
Walt Disney's Historical Odds of Positive Post-Earnings Return
Here are some insights into one-day (1D) post-earnings returns:
Further data for observed 5-Day (5D) and 21-Day (21D) returns post earnings is summarized alongside the statistics in the table below.
5-Day (5D) and 21-Day (21D) returns post earnings
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach (though not effective if the correlation is low) is to analyze the correlation between short-term and medium-term returns following earnings, identify a pair with the highest correlation, and perform the appropriate trade. For instance, if 1D and 5D exhibit the highest correlation, a trader can take a 'long' position for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on the 5-year and more recent 3-year history. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and subsequent 5D returns.
Correlation Between 1D, 5D, and 21D Historical Returns
Is There Any Correlation With Peer Earnings?
At times, the performance of peers can affect post-earnings stock reactions. In fact, pricing might begin prior to the earnings announcement. Here is some historical data regarding the post-earnings performance of Walt Disney stock compared to the stock performance of peers that reported their earnings just before Walt Disney. For a fair assessment, peer stock returns also reflect post-earnings one-day (1D) returns.
Correlation With Peer Earnings
Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of all three: the S&P 500, S&P mid-cap, and Russell 2000), providing strong returns for investors. Additionally, if you seek value with a smoother experience than an individual stock like Walt Disney, consider the High Quality portfolio, which has surpassed the S&P and delivered returns exceeding 91% since its inception.
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