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Why Disney Will Move the Dow Tomorrow

For the most part, the Dow Jones Industrials (DJINDICES: ^DJI  ) have made their way through the first-quarter earnings season unscathed, with solid results in April sending the index to a new all-time high on the last day of the month. But there are still a few more companies left to report: Disney (NYSE: DIS  )  later today will give its read on the entertainment industry, providing insight on its massive portfolio of movie, television, and interactive content, as well as its theme parks and consumer goods divisions. What Disney says about those areas could have a big influence on the Dow and the rest of the stock market on Wednesday.

Source: Disney.

Disney will report its results after the market closes this afternoon, with the release expected just a few minutes after 4 p.m. EDT. Executives will then hold a conference call, which should begin at 5 p.m. EDT, to discuss the results and provide further insight on what's happening at Disney.

Source: Disney.

Unlike many Dow components that have issued quarterly reports so far this earnings season, Disney is poised to deliver strong growth both in revenue and earnings for the quarter. That growth has come from just about every avenue that Disney has to offer. Its studio entertainment division has delivered a number of blockbuster hits lately, ranging from the animated musical Frozen to Captain America: The Winter Soldier. Buzz about next year's seventh episode of the landmark Star Wars movie saga has gotten a lot louder lately with the announcement of key cast members, with both established actors and newcomers to the series contributing to the overall effort.

It's easy to forget just how many ways Disney has to make money for its shareholders. Television networks give Disney another way to show people the company's content and offer other revenue opportunities, especially the sports giant ESPN. With the miserable weather in many areas during the first quarter, Disney's U.S. theme parks in Florida and California looked even more attractive to winter-weary travelers seeking a break from the cold. And as Disney's merchandising unit ramps up its efforts to meet soaring demand for products affiliated with its hit movies and television series, you can count on the company to make the most of every available dollar of profit. The company is a great case study among the Dow Jones Industrials when it comes to maximizing revenue through cross-selling opportunities.

General Electric divested its stake in NBC Universal last year, leaving Disney as the only company with a true media and entertainment focus in the blue-chip index. But given how important entertainment is in the daily lives of millions of people around the world, Disney provides a window into how the entire business is performing.

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  • Report this Comment On May 06, 2014, at 12:13 PM, esxokm wrote:

    Disney is definitely, in theory at least, poised to go higher over the next year. Management's challenge now is to allocate free cash flow and capital investment in the best ways possible that allow intrinsic value to increase along with the headline-trading excitement.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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8/31/2015 4:57 PM
^DJI $16528.03 Down -114.98 -0.69%
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Walt Disney CAPS Rating: *****