Quicken: Schaeffer's Market Observation Features DIS

Can Disney Work its Magic on Earnings?

After the close of the market on Thursday, entertainment giant Walt Disney will report earnings. The Street is currently expecting the company to report a profit of 11 cents per share, which is down 15 percent from the same period a year ago. However, DIS has a history of meeting the consensus estimate. In fact, the firm has met or surpassed the Street forecast for the past four quarters, according to Yahoo! Finance. Analysts will definitely be looking to see how deeply the company's profits will be cut by a potential drop-off in theme park attendance due to the war with Iraq and SARS.

Sentiment toward the shares has been mixed recently. Options players continue to view the security with optimism, as calls nearly double puts in the front three months of options. The stock's Schaeffer's put/call open interest ratio sits at 0.58.

Wall Street also continues to be enchanted by the Magic Kingdom, as only two of the 24 analysts following the stock rate it a "sell," according to Zacks. This leaves ample room for future downgrades should the company fail to impress.

On the other side of the coin, the number of DIS shares sold short has been steadily rising. The equity's short interest has soared 24 percent since December to 53.7 million shares. This is 5.23 times its average daily trading volume and could help to fuel a rally should the short sellers be pressured into buying back their positions.

Technically speaking, the shares have been rising along support at their 10-day and 20-day moving averages since mid-March. However, DIS is now facing some staunch resistance in the 19-20 area. This region has halted a number of rally attempts since November.

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Schaeffer's Market Observations are market-based reports that provide insight and analysis from a unique and unbiased perspective. Market Observations are published on http://www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. To receive a free email notification each time a new commentary is written about one of the featured stocks or any of your favorite stocks, click on the following link: http://www.schaeffersresearch.com/addinfo .

--Posted April 30, 2003
Source: Schaeffers Research