Week in Preview: Coca-Cola, Disney, Hasbro Earnings
- Tuesday: Weekly chain-store sales
- Wednesday: Federal budget balance for January
- Thursday: Wholesale trade data in December
- Friday: Trade balance in December and the weekly inflation survey
Walt Disney: Strong Earnings Growth
The world's largest media conglomerate boosted its dividend and Mickey Mouse came to the Nintendo Wii during the fiscal first quarter. Analysts forecast earnings for the period to come to 56 cents per share, an increase of 16.1% from the same quarter of last year. The Burbank, Calif.-based company also is expected to post revenues of $10.5 billion for the three months that ended in December. That's 8% more than a year earlier.
Looking ahead to the second quarter, analysts so far expect to see similar EPS results, but only about a 6% annual rise in revenue. Disney's earnings have topped consensus estimates in most recent quarters, but missed by a penny per share in the fourth quarter.
Disney has a long-term EPS growth forecast of 11.4%, as well as a forward price-to-earnings ratio of 16.5. Its PEG ratio is 1.4 and the dividend yield is 1%. The First Call consensus recommendation has been to buy DIS for more than 90 days. The mean price target is currently $42.54. The upcoming Pirates of the Caribbean 4 movie is expected to boost the company's box office market share. Shares have climbed more than 15% in the past six months and are trading near a multiyear high.
Many other companies are also anticipated to post double-digit earnings growth this week, including Advance Auto Parts (AAP), Allstate (ALL), Chipotle Mexican Grill (CMG), Ingersoll-Rand (IR), MetLife (MET), Polo Ralph Lauren (RL), PepsiCo (PEP), Philip Morris (PM), Prudential (PRU), Take-Two Interactive (TTWO), Total (TOT) and Whole Foods (WFMI).
Coca-Cola: Modest Earnings Growth
Analysts anticipate that the world's largest soft drink company will report Wednesday that its fourth-quarter earnings came in at 72 cents per share, up from 66 cents per share a year ago. Atlanta-based Coca-Cola announced a cash tender offer and continued investing in China during the three-month period that ended in December, and revenue for the quarter is predicted to total $9.8 billion, an year-over-year jump of 29.8%.
Coca-Cola's long-term EPS growth forecast of 8.7% is in the same ballpark as rivals PepsiCo (PEP) and Dr Pepper Snapple (DPS). Coke's forward P/E of 16.7 is less than its trailing P/E, meaning the stock is seen as a better bargain. The PEG ratio is 1.9, the dividend yield is 2.8%, and the return on equity (ROE) is 30.3%. Analysts on average recommend buying KO and their mean price target is $71.63. Bloggingstocks and DailyFinance contributor Joseph Lazzaro sees KO heading for $80. Shares have traded just above $62 in the past few weeks, down from the 52-week high of $65.88 in December.
McAfee (MFE) and Wyndham (WYN) are also expected to post modest year-over-year earnings growth in the fourth quarter.
Hasbro: Earnings Decline
During the three months that ended in December, the maker of Play-Doh, G.I. Joe, Scrabble and many other classic toys and games set new environmental sustainability goals and shared its long-term strategy at its investor day. The Rhode Island-based company is expected to post earnings of 95 cents per share. That's down from $1.09 per share last year. And analysts are also looking for a 4.9% slide in revenue to $1.3 billion.
For the full year, analysts expect to see earnings of $2.54 per share (up 2.4%) on revenue of $4 billion (down 1.1%). But earnings have been better than expected in recent quarters, topping estimates by as much as 27 cents per share.
The 10% long-term EPS growth forecast is better than that of larger competitor Mattel (MAT). Hasbro's forward P/E is 16.0, but that's much less than the industry average. The PEG ratio is 1.6, the dividend yield is 2.1%, and the ROE is 23.9%. The consensus recommendation is to buy HAS and the mean price target is $51.71. Despite a dividend boost, Zacks remains cautious on the stock, though. The share price has fallen about 5% year to date and closed the week at $44.82.
Analysts also expect to see smaller earnings from Cisco Systems (CSCO), Humana (HUM), Kraft Foods (KFT), Molson Coors (TAP), Noble Energy (NBL), Northrop Grumman (NOC), Sara Lee (SLE) and Toyota (TM). Net losses are expected from Goodyear (GT) and Sprint Nextel (S).