Disney's Earnings Pessimism Pulls the Dow Lower
Aug 7th 2013 2:33PM
Updated Aug 7th 2013 2:38PM
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
As earnings season comes to a close, one more downbeat report has weighed on the Dow Jones Industrial Average today. The Dow's down about 50 points as of 2:20 p.m. EDT, with entertainment giant Disney leading the way down. Disney has slipped 1.6% after it reported its second-quarter results after yesterday's market close. It's hardly the only stock losing value on the index; the majority of blue-chippers are in the red today. Let's catch up on the top stories around the Dow.
Disney's earnings can't impress Wall Street
On the surface, Disney's earnings weren't all that bad. The company's earnings per share narrowly edged out analyst projections, and the company's revenue grew more than 4% year over year for the quarter. The closely watched studio division suffered through a lackluster quarter, however, as the box-office bomb The Lone Ranger weighed on results. The division's profit fell 36% for the quarter, with sales down 2% despite the booming success of titles such as Monsters University and Iron Man 3. However, given Q2 2013's release of The Avengers -- one of the best-selling films of all time -- Disney had a lot to live up to this quarter.
The results are still hardly reason for pessimism. The company's parks division grew revenue at a solid 7% clip, with operating profit up 9%. Additionally, Disney's media segment posted operating profit growth exceeding 8% as advertising at networks such as ABC and ESPN helped push up revenue. Ultimately, Disney is a diverse company with a plethora of star brands. One downbeat quarter from its films department isn't a reason to sell in a panic.
Bank of America's struggling through a much different trial today, with shares down around 1.7%. The company's facing a lawsuit from the U.S. government alleging that the bank committed investment fraud in selling $850 million of mortgage-backed securities to investors before the recession hit. The government claims that B of A lied to investors about risk in the securities, while Bank of America defended its actions by claiming that the securities performed better than similar alternatives at the time. For investors, it's a key lawsuit to watch as the bank attempts to put aside the scrutiny of the 2008 recession.
DuPont leads a small corps of Dow stocks higher today, with shares of the chemical giant up 0.7% so far. The stock's been one of the best performers on the Dow this year, with shares up nearly 34% year to date. However, DuPont could be ready to keep surging as it pivots toward the growth of its agricultural division, which boosted its recent earnings report even as overall company profit fell about 12%. The company's considering a sale or other divestment of its performance-chemicals division, given its recent lackluster performance, and if DuPont can shed its slower-growth parts, the slimmer company could be a star.
Despite that down quarter, DuPont has been a growth investor's dream this year. Looking for more stocks to lead your portfolio's future growth? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks -- and he wants to share it, along with a few of his favorite growth stock superstars, with you. It's a special 100% free report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains and click here for instant access to a whole new game plan of stock picks to help power your portfolio.
The article Disney's Earnings Pessimism Pulls the Dow Lower originally appeared on Fool.com.Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Walt Disney. The Motley Fool owns shares of Bank of America and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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