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What to Expect From Disney's Earnings

Robert Downey Jr. rings the opening bell at the New York Stock Exchange as Iron Man 3 debuts in New York City.
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Robert Downey Jr. rings the opening bell at the New York Stock Exchange as Iron Man 3 debuts in New York City.

Heading into its fiscal second quarter earnings announcement on Tuesday, Disney shares are trading around an all-time high, up about 50 percent over the past 12 months. With analysts growing increasingly optimistic this quarter, and the majority of analysts rating the company a "buy," the big question is whether the media giant will beat expectations as it did last quarter, sending the stock even higher.

Disney's biggest and most profitable division—media networks—will be in the spotlight. New carriage deals for ESPN, are expected to push revenues higher. Still, investors will have a keen interest in how advertising is faring at the networks. Disney's also been investing in its parks division, so investors will be looking for margins to start growing.

This quarter the studio, bolstered by "Oz: The Great and Powerful," faces easy comparisons to the year-ago quarter when big budget "John Carter" bombed. Perhaps even more important than this past quarter's films, are the current quarter's, including "Iron Man 3," which opened last weekend with the second biggest U.S. box office debut ever—$175 million. Though Disney never gives official guidance, analysts are sure to probe on the conference call for some indication of how the movie will boost the bottom line in the company's fiscal third quarter.

Analysts are projecting Disney's fiscal second quarter revenue to grow 9 percent to $10.49 billion, while earnings per share are projected to grow 32 percent to 76 cents, according to Thomson One Analytics.

UBS analysts John Janedis and Jaime Morris upgraded Disney to "buy" Friday, saying that the contribution from retransmission deals for ABC and the "cusp of parks margin expansion are under-appreciated by the market." And the analysts are bullish that the investments at the parks and its unit Lucasfilm will "become more visible going forward."

Morgan Stanley's Ben Swinburne said that these quarterly results will "shed light on the greatest single driver of EPS growth ahead—pricing power." He said there's potential for further upside in shares, especially considering expectations of higher parks margins and the potential of the Star Wars franchise, which will release new movies starting in 2015. With these assumptions ahead of earnings, Swinburne reiterated an "overweight" rating on the stock and raised his price target.

We'll be watching the numbers and breaking down their implications when they report after the bell Tuesday.

—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.