Walt Disney Co (DIS)

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$DIS Fears over an impending recession have led to investors dumping many fundamentally weak stocks this year
By: Stock News | August 2, 2022

The Fed’s aggressive policy tightening to control the surging inflation has significantly increased the odds of the economy slipping into a recession. The U.S. economy contracted 1.6% in the first quarter and 0.9% in the second quarter, making many analysts believe that a recession has arrived.

Moreover, the speculations over Speaker Pelosi’s visit to Taiwan worsening a troubled U.S.-China relationship are expected to add to the market volatility. As the economic and geopolitical uncertainties are expected to keep the stock market under pressure, fundamentally weak stocks could keep losing.

Given this backdrop, we think it could be wise to avoid beaten-down stocks The Walt Disney Company (DIS) and Teladoc Health, Inc. (TDOC), which are not expected to find a bottom soon.

The Walt Disney Company (DIS)

DIS engages in film and episodic production and distribution activities and operates television broadcast networks, studios producing motion pictures, and D2C streaming services. It sells branded merchandise through retail, online, and wholesale businesses and develops and publishes books, comics, and magazines.

For its fiscal 2022 second quarter ended April 2, 2022, DIS’ pre-tax income from continuing operations came in at $1.10 billion, down 10.4% from the year-ago period. While its net income increased 47.8% year-over-year to $470 million, its EPS fell 46.9% to $0.26. As of April 2, 2022, the company had $13.27 billion in cash and cash equivalents, down 16.8% from the end of fiscal 2021.

The stock has lost 31.4% year-to-date to close the last trading session at $106.22, down 43.4% from its 52-week high of $187.58.

DIS’ POWR Ratings reflect this bleak outlook. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has a D grade for Value and Quality. Click here to see the additional ratings for DIS’ Stability, Growth, Sentiment, and Momentum. DIS is ranked #12 of 18 stocks in the F-rated Entertainment – Media Producers industry.

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