If you read the news, it sounds like entertainment giant Disney (DIS) is having a terrible year...
The Power Gauge Shows the Real Story at Disney
By Ethan Goldman, junior analyst, Chaikin Analytics
If you read the news, it sounds like entertainment giant Disney (DIS) is having a terrible year...
The company's live-action Snow White remake had an estimated total production cost of $300 million.
As the movie nears its final showings, worldwide box-office revenues have now crept up to around $200 million. Meanwhile, many of the louder voices on social media have been blunt about claiming how bad the movie is.
Considering the production cost and disappointing ticket sales, that's a huge loss. And it was deep enough that Disney reportedly put a pause on a future live-action remake.
It also seems like the trade-war chaos has only been making things worse. Many folks assumed that the number of international tourists traveling into the U.S. would drop as a result.
On the surface, it's easy to confirm this kind of thinking.
Living in Florida as a kid, I loved visiting "The Most Magical Place on Earth" – Walt Disney World near Orlando. And over a recent mid-morning brunch, my mom shared a piece of mail Disney had sent her. It was a special offer for Florida residents. And the offer was "simply too good to pass up."
But that might raise more red flags. It could make you wonder whether Disney is scrambling for cash.
Today, it sure might seem like things are going wrong for the company.
At least, that's what the media would have you believe. But as I'll explain, a closer look reveals a "bullish" turn in the Power Gauge...
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The Power Gauge Saw Signs of Strength With Disney's Stock
You see, on May 6, Disney was trading for $92.17 per share. And the Power Gauge gave it a "neutral+" rating.
As regular readers know, our system switches to a "neutral+" rating when a "bullish" or better stock is trading below its long-term trend line.
In fact, Disney had held that "neutral+" rating in the Power Gauge for all of April and most of March. Our system saw that the stock was stuck below its long-term trend line. But it also saw signs of strength "under the hood."
On May 7, Disney released its second-quarter earnings report. And it was obvious that things have been going better than the popular narrative would have you believe.
Disney's earnings beat expectations.
The company reported a 7% year-over-year increase in overall revenue. And its Entertainment and Experiences segments showed big leaps. Year over year, revenue for those categories jumped 9% and 6%, respectively.
Snow White may have struggled. But Disney's Entertainment segment still showed a big jump in revenue.
We see a similar story when we look deeper into the most recent travel data for Orlando...
After all, Orlando International Airport is the closest airport to Disney World. And the complex is the biggest attraction in the area.
Well, international travel in March was up more than 10% since last year. International tourists were still piling into Orlando for their vacations.
Again, there's no doubt that DIS shares were down for a roughly two-month span...
Meanwhile, the narrative in the media made it sound like Disney was doomed. And taken at face value, it was easy to believe this story.
But the Power Gauge still saw signs of strength. It rightly gave Disney a "neutral+" rating. Yet it knew that the stock still had "bullish" signs. And it never flipped into "bearish" territory.
The chart below shows the stock's move this year...
As you can see, Disney is trading above its long-term trend line again. And the stock flipped back into "bullish" territory after the strong earnings report. Today, it earns a "very bullish" rating from the Power Gauge.
Disney controlled the narrative surrounding the company with strong earnings. And the Power Gauge made it easier to see the truth behind the story. It sees upside ahead for the stock right now.
Good investing,
Ethan Goldman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.7%
12
13
5
S&P 500
+0.49%
127
259
114
Nasdaq
+0.11%
31
56
13
Small Caps
+0.65%
488
922
476
Bonds
+0.88%
Utilities
+2.13%
5
23
3
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks have turned somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Information Technology
+7.61%
Consumer Discretionary
+7.04%
Energy
+4.9%
Industrials
+4.53%
Communication
+3.49%
Financial
+2.85%
Materials
+2.17%
Utilities
+1.11%
Real Estate
+0.31%
Consumer Staples
-0.29%
Health Care
-2.74%
* * * *
Industry Focus
NYSE Technology Services
19
14
2
Over the past 6 months, the NYSE Technology subsector (XNTK) has outperformed the S&P 500 by +8.51%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #5 of 21 subsectors and has moved up 4 slots over the past week.
Top Stocks
MSFT
Microsoft Corporatio
PDD
PDD Holdings Inc.
NFLX
Netflix, Inc.
* * * *
Top Movers
Gainers
STE
+8.52%
DG
+6.03%
HCA
+4.9%
AWK
+4.89%
CSCO
+4.85%
Losers
FI
-16.19%
UNH
-10.93%
FSLR
-3.52%
MPWR
-3.26%
UAL
-3.1%
* * * *
Earnings Report
Earnings Surprises
TTWO Take-Two Interactive Software, Inc.
Q4
$1.30
Beat by $0.21
DE Deere & Company
Q2
$6.64
Beat by $1.02
WMT Walmart Inc.
Q1
$0.61
Beat by $0.03
AMAT Applied Materials, Inc.
Q2
$2.39
Beat by $0.08
* * * *
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