Earnings season continues to surprise investors! While we are approach the end of earnings season, we are always keeping a close on earnings releases to determine if a company is worth buying. This week, there are two companies that have caught our attention. In fact, we decided to sit down, grab some coffee, and perform a deep earnings preview for Disney stock and Cisco stock prior to their earnings release on Thursday.
Earnings Preview: Disney Stock (DIS)
Disney Stock (DIS) is as iconic as a company as they come. We all have been impacted by this company at some point in our lives. Whether Disney makes you think about family movie nights from your childhood or the excitement that Disney brings to your child’s face, every person has their own personal Disney story.
From the company’s humble roots, Disney has grown from a small, animated film company to a media giant. Could you imagine what Walt Disney would think of the 2020 version of his company? Disney’s media portfolio contains some of the largest names in the entertainment sector, including ABC, ESPN, Pixar, Star Wars, Marvel, to name a few.
Disney’s portfolio is diversified as well. The company has master leveraging their iconic brands and characters. The company’s revenue includes merchandise and major retail operations. In addition, we cannot forget about Disney’s massive theme park operation. Every child dreams of visiting Disneyworld, right? Prior to COVID, Disney’s theme parks were always packed with visitors from across the globe!
In 2019, Disney entered the streaming wars with the launch of Disney+. Disney’s new streaming service has allowed the company to compete with Netflix, Amazon, Hulu, and other streaming services. The company has found yet another way to earn revenue while delivering their vast content library to consumers. It could not have come at a better time, as Disney+ has seen its subscription base boom during the pandemic.
Disney’s stock is trading a high multiple compared to earnings. The company’s P/E ratio is 49x earnings! That is an insanely high ratio, well above the S&P 500 (currently around 35x earnings). Even with some of the headwinds the company has faced from COVID, DIS’s stock price has performed well lately.
Still, the pandemic has had a negative impact on Disney’s stock. The company suspended its dividend in 2020, as the company’s theme parks were suddenly closed. Prior to COVID, the company was becoming a solid dividend growth stock.
Overall, we are both expecting Disney to report strong subscription growth for Disney+ while mixed results for earnings. Further, we discuss Disney’s dividend and when we expect Disney to reinstate their dividend!
Earnings Preview: Cisco Stock (CSCO)
Cisco Stock (CSCO) is a dividend growth stock that has increased its dividend for nearly a decade. The company is a leading, technology dividend stock. Cisco continues to provide security services for corporations, as the needs for enhanced security grows with a workforce that will be working from home for the forseeable future. Further, their Webex platform connects coworkers, families, and friends alike.
We continue to watch, and purchase, shares of Cisco. Cisco has been one of Bert’s favorite stocks to buy over the last few months, while Lanny has already established a large position in the company.
Why have we been so high on CIsco? This is due to the fact that Cisco performs very well in our dividend stock screener. Our dividend stock screener is designed to help us identify undervalued dividend growth stocks. We use 3 simple metrics to assess if a company is an undervalued dividend stock to buy. Let’s show you how well Cisco performs in our screener:
1. P/E Ratio < S&P 500: Cisco’s P/E Ratios is 11.3X, well below the S&P 500.
2. Dividend Payout Ratio < 60%: Cisco’s dividend payout ratio is 43%. This is within our perfect dividend payout ratio range of 40%-60%.
3. Dividend Growth History: Cisco has increased its dividend for a nearly decade and has a solid dividend growth rate.
Bonus Metric: Cisco pays a very strong dividend as well. In fact, their dividend yield is close to 4%, as the company’s stock price trades in the high $30/share and low $40/share range.
Overall, we are expecting a boring, consistent earnings released from Cisco compared to last year. However, boring is good, for Cisco. Nothing would make us happier than seeing the company deliver consistent results compared to the previous quarter. We are expecting the company to earn between $.75/share – $.80/share. We wouldn’t complain if Cisco delivered us a positive surprise.
Summary
We couldn’t be more excited for Disney and Cisco to report earnings this week. Disney has a chance to shock investors with a surprise dividend announcement (even though we do not think that is likely). Cisco, on the other hand, has an opportunity to show why they are one of the best dividend stocks to own in the technology sector by delivering consistent, growing results.
Therefore, jump into our video, as we go over the Best Dividend Stock to Buy. This legendary dividend aristocrat surely does deserve a video view and a spot in your portfolio, potentially!
—-> Watch the Video: Earnings Preview: Disney Stock and Cisco Stock <—
Let us know what you are expecting from Disney and Cisco on Thursday. We are excited to hear your thoughts, as always, as we love the interaction and feedback!
-The Dividend Diplomats