Everyone is watching Walt Disney (DIS). The company is set to announce its third quarter 2025 financial results around Wednesday, August 6. People are wondering how the stock will react afterwards.
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Analysts expect Disney to report earnings of about $1.45 per share. They also predict revenue will increase by roughly 2.5% to reach $23.75 billion. Disney+ and the company’s other streaming services are expected to remain major contributors to these financial results this quarter. Subscriber growth might be slow because of recent price increases.
However, Disney has been heavily focused on making its direct-to-consumer operations more profitable. For example, in the second quarter of Fiscal year 2025, Disney’s direct-to-consumer segment made $336 million in operating income. This was a significant jump from just $47 million one year prior. Price increases and higher advertising revenues fueled this improvement.
For investors, much will depend on how results compare to consensus and expectations. However, understanding historical trends may turn the odds in your favor if you are an event-driven trader.
How Can Investors Approach This
There are two approaches to achieve this. First, you can understand historical probabilities. Then you can position yourself before the earnings release. Second, you can analyze the correlation between immediate and medium-term returns following earnings. Then you can position yourself accordingly after the earnings are announced.
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Disney Stock’s History Reveals Earnings Trends
Here are some insights into one-day (1D) post-earnings returns.
Over the last five years, there are 20 recorded earnings data points. 10 positive and 10 negative one-day (1D) returns were observed. In summary, positive 1D returns were seen approximately 50% of the time. This percentage remains unchanged at 50% if we consider data from the last 3 years instead of 5. The median of the 10 positive returns is 5.6%. Meanwhile, the median of the 10 negative returns is -3.5%.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach involves analyzing the correlation between short-term and medium-term returns following earnings. This is not effective if the correlation is low. You identify a pair with the highest correlation. Then you perform the appropriate trade. For instance, if 1D and 5D exhibit the highest correlation, a trader can take a “long” position for the next 5 days if the 1D post-earnings return is positive.
Is There Any Correlation with Peer Earnings?
At times, the performance of peers can affect post-earnings stock reactions. In fact, pricing might begin prior to the earnings announcement. Here is some historical data regarding the post-earnings performance of Walt Disney stock compared to the stock performance of peers that reported their earnings just before Walt Disney. For a fair assessment, peer stock returns also reflect post-earnings one-day (1D) returns.
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Is Disney Stock a Good Buy?
Wall Street is still optimistic about Disney (DIS). According to 19 analysts tracked by TipRanks over the last three months, 16 say Buy, three say Hold, and none recommend Sell. That earns the stock a “Strong Buy” consensus rating.
The average 12-month DIS price target sits at $134, implying a potential upside of 10.39% from current levels.
