Earnings Preview: DIS Leads Media Earnings Rush


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Disney (DIS)

February 7, After the Market Close

Disney leads a group of major media companies that are set to report quarterly results this week.  Time Warner (TWX) and News Corp. (NWS) are also on the earnings docket, but the tone of trading in the sector will likely be set by the Mouse House.

Disney is expected to earn $1.49 per share.  This would be a notable drop compared to last year, when the company earned $1.63 per share.

Revenue is expected to hold steady in the quarter.  Analysts are looking for the figure to come in at $15.26 billion, about flat with last year.

Implied volatility has drifted up for Disney over the last several weeks, but it remains relatively subdued for an earnings report.  IV reached 20.6 on February 2, its highest level November.  However, that's well off the 25.9 reached on November 4, prior to its last earnings report.

The post-earnings moves for DIS have been less than expected recently.  Over the past four quarters, the average absolute post-earnings move has been just under 3%, compared to an expectation of 4%.

The ATM Straddle premium for the February 10 expiration is $3.42, or 3.1%.

Netgear (NTGR)

February 7, After the Market Close

Earnings at Netgear are expected to fall from last year.  Analysts have a consensus estimate of $0.77 per share, compared to $0.83 per share in the same period last year.  Revenue is expected to come in at $348.6 million, which would be down 3.4% compared to last year's mark of $360.9 million.

NTGR's Implied Volatility has been rising since early December.  It closed last Friday at 47.9, its highest level since April.

The ATM Straddle premium for NTGR for the February 17 is currently at $5.11, or 9%.

The post-earnings moves for NTGR have consistently underperformed expectations over the past four quarters.  The average absolute post-earnings move over that time was 7.1%, compared a pre-report expectation of 11.2%.  This followed a period of four quarters in which the post-earnings moves consistently beat expectations by large margins. 

NVIDIA Corp. (NVDA)

February 9, After the Market Close

Implied Volatility for NVIDIA rose from late November until late December.  It came off that level and traded in a range through much of January.  However, in the last couple weeks, IV has ticked higher, reaching 59.2 on February 2, its highest level since last February.

For NVDA's last earnings report, which took place in November, the stock posted a dramatic post-earnings move, skyrocketing 29.8% following the release of its quarterly report.  This compared to an expectation of a 7.8% move. 

This skews the average earnings comparisons over the past few months.  However, NVDA has generally posted larger-than-expected moves following its recent earnings reports.  Going into November's report, the average over the preceding four quarters had been for a post-earnings move of 10.8% compared to an average pre-earnings expectation of 8.5%. 

Including November's quarter causes this gap to expand.  Taking the last five quarters into account, the average post-earnings move is 14.6% compared to an expectation of 8.4%. 

This time around, analysts are projecting a sharp rise in NVDA's quarterly earnings.  EPS is projected to come in at $0.83 compared to $0.35 last year.  Revenue is expected to jump around 50%, rising to $2.1 billion for the quarter compared to $1.4 billion last year.

The ATM Straddle premium for NVDA for the February 10 expiration is currently $10.29, or 9%.