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Take Your Position: Disney

Investors are eager to hear from Disney on Thursday. In fact, its one of the more important companies giving results this week and what they say could move markets.

That’s because Disney is widely considered a barometer for consumer spending. Investors will be keen to hear just if Americans are opening their wallets for Disney movies, theme parks, toys and more.

What the analysts say:

On average, analysts polled by Thomson Reuters expect Disney to post a profit of 50 cents per share on revenue of $8.82 billion. In the same quarter of last year, the company reported a profit from continuing operations of 62 cents per share on revenue of $9.24 billion.

You'll know the economy is improving if: Disney beats profit expectations. Also, if the company does not announce more job cuts, it may be a sign the economy has hit bottom.

You'll know the economy is not improving if: Advertising revenue declines further than expected, signaling that businesses are still wary about spending money. Ad sales are expected to be down 10 percent for broadcaster ABC and off in the single-digits at ESPN.

What’s the trade?

Of all the diversified media assets, Disney has the fewest toxic assets, explains David Bank of RBC. And since 1982 the company has not traded below 12 times earnings with the exception of the worst of the crisis. For the long-term I think it’s attractive.

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For David Bank:
RBC Capital Markets Managed a Public Offering Of (DIS)
RBC Capital Markets Has Received Compensation from (DIS)
RBC Capital Markets Is A Market Maker In Shares of (DIS)
RBC Capital Markets Is Currently Providing (DIS) With Non-Securities Services