Hundreds of companies are reporting earnings this week, and a lot of them will be on the move. This is also a great opportunity for some of the names that have fallen out of favor to prove themselves worthy of second chances.
Disney (DIS +2.30%), Zillow (ZG +6.60%) (Z +6.26%), and Peloton Interactive (PTON +1.39%) all closed lower last year and are reporting quarterly results this week. Let's take a closer look at them for potential catalysts to turn things around.
Image source: Getty Images.
Disney
Last year was weird -- to say the least -- for Disney shareholders. A lot of its businesses returned to life. The original Disneyland resort unlocked its turnstiles after being closed for more than a year. Its cruise ships began sailing again. Disney even began sending movies to the local multiplex again, and its Marvel franchises delivered the industry's four highest-grossing movies of 2021 in this country.
It wasn't enough, though. Disney still wound up being the worst-performing stock in the Dow 30.
It gets its best chance to turn things around this week when it reports results for its fiscal first quarter of 2022 on Wednesday afternoon. There are a lot of moving parts to Disney, and analysts have been tweaking their estimates lower lately.
It's not a good sign, but the stock seems to be moving more on how Disney+ subscriber counts played out rather than trailing financial results. If Disney can offer an upbeat view of the near future, it can reverse the pessimism that finds the stock already trading lower again in 2022.
Zillow Group
Is opportunity knocking on Zillow Group? Shares of the leading online real estate portal have fallen sharply since announcing that it would be winding down its home-flipping business. The move will find Zillow returning to its roots of helping real estate pros generate leads of potential property buyers or renters, while also generating home seekers with tools to find their next places to live.
The core Zillow business isn't too shabby. It attracts 227 million monthly unique visitors to its websites and apps, and this is a growing and profitable business. Unlike the company's home-flipping business, which was losing money and lumpy in terms of generating chunky low-margin revenue, the balance of its operations still managed to grow revenue by 37% through the first three quarters of last year.
We'll get the final quarter in the books when it steps up shortly after Thursday's market close. Investors have had three months to get over the end of Zillow Offers. They may like what Zillow Group can do in the new normal after this-week's financial update.
Peloton
It's fair to say that Peloton has made quite the entrance this new trading week. The stock is soaring after a Wall Street Journal report -- surfacing after the close of trading last week -- claiming that Amazon.com is among the potential suitors exploring a purchase of the premium home-fitness specialist.
There are some serious growing pains at Peloton, but seeing the market cap of the well-established high-end brand drop from more than $50 billion to $8.1 billion by the end of last week was apparently a dinner bell. There's no guarantee that Amazon or anyone else will make an offer for Peloton, and the company itself isn't officially up for sale.
However, it's easy to see how a well-heeled brand like Peloton could thrive under the right tech giant, especially one like Amazon that's already making inroads into health and connected fitness. It would love the chance to make an upmarket play at a discount.
The chatter will inevitably subside without tangible reports of advancing takeover talks, and that brings us to Tuesday, when Peloton will report its fiscal second-quarter results. Growth has hit the wall at Peloton. It previously reported back-to-back quarters of sequential declines in revenue and total workouts.
However, it did already announce that it had 2.77 million connected fitness subscribers by the end of December, up respectably from the 2.5 million it was working out three months earlier. The $1.14 billion in revenue that it pre-announced was in line with earlier expectations, as well as a sequential and year-over-year increase.
There's a lot that needs fixing at Peloton. The brand has taken a few reputational hits after a treadmill recall last year and then playing unflattering health-altering roles in a pair of TV shows. Peloton will also address on Tuesday how it will cut costs in the near future, a break from its previously ambitious expansion plans.
With a lot of the bad news likely already discounted, Peloton is positioned well to have a strong week with even a decent earnings report. The buyout buzz is just the cherry on top.
