Welcome back to Power Lunch with Disney set to report third quarter results on Wednesday before the bell. Investors will be keeping a close eye on theme park revenue and streaming subscriber growth. Disney shares have jumped nearly 30% over the past three months, but the stock's recent run has cooled off as of late.It's falling about 4% over the past month. Julia Borson joins us now to break it all down and give her predictions on what we may or may not hear tomorrow morning on the call. It's so good to hav ...

Core Insights - Expedia Group (EXPE) is set to report its second-quarter 2025 results on August 7, with expected revenues of $3.71 billion, reflecting a 4.39% increase year-over-year, and earnings estimated at $4.14 per share, indicating a 17.95% rise from the previous year [1][3]. Financial Performance Expectations - The Zacks Consensus Estimate for EXPE's second-quarter 2025 revenues is $3.71 billion, a 4.39% increase from the same quarter last year [1]. - The consensus for earnings is $4.14 per share, which is a $0.01 increase over the past 30 days and represents a 17.95% increase year-over-year [1]. Recent Performance Trends - EXPE has surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters, with an average surprise of 5.48% [2]. - The company anticipates gross bookings growth of 2-4% and revenue growth of 3-5%, with a one-point benefit from the Easter shift and a two-point foreign exchange headwind [3][9]. Market Dynamics - The performance in the second quarter is expected to be influenced by ongoing challenges in the U.S. market, resilience in international markets, and cost optimization efforts [3]. - Domestic travel softness and reduced inbound flows may have impacted B2C performance due to EXPE's significant U.S. market exposure [4]. Segment Performance - The B2B segment is expected to be a key growth driver, likely maintaining double-digit momentum supported by expanded partnerships and strength in the APAC region [5]. - Advertising revenues are projected to show robust growth, aided by increased partner participation and new advertising solutions, with AI-driven tools enhancing platform adoption [6]. Operational Efficiency - Management expects adjusted EBITDA margin expansion of 75-100 basis points year-over-year, driven by operational efficiency initiatives and cost discipline measures, including restructuring actions affecting approximately 4% of employees [7].

Core Insights - Warner Bros. Discovery (WBD) is set to report its second-quarter 2025 results on August 7, with expected revenues of $9.83 billion, reflecting a 1.20% increase year-over-year, and a narrowed loss estimate of 14 cents per share, indicating a 96.56% increase from the previous year [1][8]. Financial Performance - The Zacks Consensus Estimate indicates that WBD has surpassed earnings expectations in one of the last four quarters but missed three times, resulting in a negative average surprise of 659.92% [2]. - The anticipated revenue of $9.83 billion for Q2 2025 is supported by strong performance in the streaming segment, which saw a subscriber growth of 5.3 million and an 8% increase in streaming revenues in Q1 2025 [3][8]. Streaming Segment - The streaming segment is expected to continue its momentum, bolstered by successful releases such as "The Last of Us" and "And Just Like That," along with international expansion and growth in ad-supported offerings [3]. - The Studios segment is projected to rebound due to a major licensing agreement with the streaming division and early success from new content like the Minecraft Movie and Sinners, with the release of Superman further enhancing performance [4]. Linear Networks and Advertising - The Linear Networks segment is facing challenges due to ongoing declines in traditional TV viewership and a tough advertising market, likely leading to a drop in network revenues for the upcoming quarter [5]. - Advertising performance is expected to decline by 2% year-over-year, influenced by the absence of major sports events like the Final Four, despite some offset from the Stanley Cup Finals [6]. Earnings Expectations - According to the Zacks model, WBD currently has an Earnings ESP of -47.89% and a Zacks Rank of 3, indicating a lower likelihood of an earnings beat [7].

Market Overview - Recent market pullback due to new tariffs and a slowdown in job growth has shaken investor confidence, with July nonfarm payrolls rising by only 73,000, significantly below expectations [1] - June's job numbers were revised downward, indicating a weaker labor market than previously thought [1] - Renewed trade tensions have fueled expectations of a Federal Reserve rate cut and increased risk aversion, leading to sharp declines in major indices [1] Importance of Financial Health - Investors should not rely solely on stock price movements; understanding a company's fundamentals is crucial for informed decision-making in an unpredictable market [2] - Sales and earnings metrics can be misleading; the interest coverage ratio is a key indicator of a company's ability to meet financial obligations [3][4] Interest Coverage Ratio - The interest coverage ratio measures how effectively a company can pay interest on its debt, calculated as Earnings before Interest & Taxes (EBIT) divided by Interest Expense [5] - A higher interest coverage ratio indicates a greater ability to meet financial commitments, while a ratio below 1 suggests potential default risks [6][7] - Companies with strong interest coverage ratios include The Walt Disney Company, BJ's Wholesale Club, Ralph Lauren, and McKesson Corporation, all of which demonstrate solid debt-servicing capabilities [9][11] Investment Strategy - A favorable investment strategy includes selecting stocks with an interest coverage ratio above the industry average, a Zacks Rank of 1 or 2, and a VGM Score of A or B [8][10] - The selected companies have shown strong earnings surprises and are projected to grow sales and earnings in the coming year [9][11] Company Performance Highlights - **Walt Disney Company**: Zacks Rank 2, VGM Score B, with a trailing four-quarter earnings surprise of 16.4% and projected sales and EPS growth of 4% and 16.3% respectively [12] - **BJ's Wholesale Club**: Zacks Rank 2, VGM Score B, trailing four-quarter earnings surprise of 17.7%, with projected sales and EPS growth of 5.5% and 6.2% respectively [13] - **Ralph Lauren**: Zacks Rank 2, VGM Score B, trailing four-quarter earnings surprise of 9%, with projected sales and EPS growth of 3.8% and 11.8% respectively [14] - **McKesson Corporation**: Zacks Rank 2, VGM Score A, trailing four-quarter earnings surprise of 3.9%, with projected sales and EPS growth of 13.1% and 12.7% respectively [15]

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Group 1: Earnings Reports Overview - Palantir has secured a $10 billion Army contract and is expected to report strong quarterly results, with predictions of a "total blowout" due to strong business performance [2] - Berkshire Hathaway's upcoming earnings report is anticipated to be different under Greg Abel's leadership, with expectations of a potential stock price increase if results are favorable [1] - DuPont's breakup is on track, with expectations that the individual parts will be valued higher than the whole [3] Group 2: Sector Insights - Caterpillar is expected to post strong results, benefiting from domestic infrastructure and reshoring trends [3] - Eli Lilly's performance will be closely watched, especially in light of competitor Novo Nordisk's disappointing quarter, raising questions about market share dynamics in the GLP-1 drug sector [5] - Disney's shares have been climbing, with positive remarks on its streaming, theme park, and cruise line segments [4] Group 3: Other Companies to Watch - McDonald's is viewed as a buy due to recent improvements and new offerings [4] - Warner Bros Discovery is undergoing reorganization and debt reduction, with anticipation around its earnings report [6] - Pinterest is expected to deliver solid results, being recognized as a family-friendly advertising platform [6]

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Core Viewpoint - Analysts forecast Walt Disney (DIS) will report quarterly earnings of $1.47 per share, reflecting a year-over-year increase of 5.8%, with revenues expected to reach $23.67 billion, a 2.2% increase compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised 0.5% lower over the last 30 days, indicating a collective reevaluation by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts predict 'Revenue- Sports' will reach $4.48 billion, a decrease of 1.7% year-over-year [5]. - 'Revenue- Entertainment' is expected to be $10.75 billion, indicating a year-over-year increase of 1.6% [5]. - 'Revenue- Experiences' is projected to reach $8.79 billion, reflecting a 4.8% increase from the previous year [5]. - 'Revenue- Entertainment- Content Sales/Licensing and Other' is forecasted at $2.16 billion, suggesting a 2.1% year-over-year increase [6]. Subscriber Metrics - The number of paid subscribers for ESPN+ is expected to be 24.45 million, down from 24.90 million in the same quarter last year [6]. - For Hulu, the number of paid subscribers is projected at 54.41 million, up from 51.10 million a year ago [8]. - The average monthly revenue per paid subscriber for ESPN+ is estimated at $6.60, compared to $6.23 last year [8]. - The average monthly revenue per paid subscriber for Hulu - SVOD Only is projected at $11.48, down from $12.73 a year ago [9]. - The average monthly revenue per paid subscriber for Hulu - Live TV + SVOD is expected to reach $101.65, up from $96.11 last year [9]. - The number of paid subscribers for Disney+ in the U.S. and Canada is expected to be 58.71 million, compared to 54.80 million in the same quarter last year [10]. Stock Performance - Over the past month, Disney shares have returned -3.9%, while the Zacks S&P 500 composite has increased by 2.3% [11]. - Disney currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance in the near future [11].

Core Viewpoint - Paramount Global is preparing for a merger with Skydance, with Shari Redstone expressing confidence in Skydance's ability to manage the company's assets effectively as the merger approaches on August 7 [1][5]. Company Overview - Shari Redstone emphasized the importance of content in the media industry, a philosophy instilled by her father, Sumner Redstone, who built Viacom and CBS over nearly 40 years [2]. - Paramount has achieved significant milestones, including being the number one broadcast network for 17 consecutive years and delivering top-rated programming across various genres [3]. Merger Details - The merger involves Paramount acquiring Skydance in an all-stock deal that values Skydance at $4.75 billion, with Skydance offering up to $4.5 billion in cash for Class A and B shares [5]. - Following the merger, the Skydance investor group will own 100% of New Paramount Class A shares and 69% of outstanding Class B shares [5]. Financial Aspects - Redstone's family holding company, NAI, is being acquired for $2.4 billion as part of the transaction, raising questions about transparency regarding this payout [4][6]. - Paramount's shares have faced significant declines due to challenges in the traditional media landscape, particularly the drop in linear television viewership [6]. Historical Context - The Redstone family's media empire began in 1934 with a drive-in theater and expanded to include major acquisitions like Viacom, Paramount, and CBS [6]. - The current version of Paramount+ was launched in 2021, and Shari Redstone began exploring the sale of the company in late 2024 [7].

June Quarter 2025 Trending Schedules Simon & Schuster, which was sold on October 30, 2023, has been presented as a discontinued operation. TRENDING SCHEDULES Summarized Reported Results (GAAP) (unaudited; in millions, except per share amounts) Schedule 1 | | | 12 Months | | | | | 12 Months | | | | 6 Months | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Ended | | Quarter Ended | | Ended | | | Quarter Ended | | Ended | | | | 12/31/23 | 3/31/24 | 6/30/24 | 9/30/24 | 12/31/24 ...