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Walt Disney Stock Has a Lot to Prove on Thursday

Walt Disney (NYSE: DIS) shares may have crept back into the triple digits after spending nearly a month below $100, but if they're going to stay there, the media giant will need to come through with a strong financial report this week. Disney tees off on its fiscal fourth-quarter results shortly after Thursday's close.

Disney's buoyancy this week is tied to Monday's reports that CEO Bob Iger is in talks with Twenty-First Century Fox (NASDAQ: FOX) (NASDAQ: FOXA) to acquire most of its assets. CNBC is reporting that Disney initiated talks to snap up Fox's TV production business along with its 20th Century Fox movie studio and cable networks, including FX and the National Geographic Channel. The deal reportedly leaves out the Fox broadcast network, Fox News, and its sports programming business, segments that would probably be hard for regulators to clear given Disney's own dominance in those markets. 

The market's clearly moving on the potential Twenty-First Century Fox grab, but a strong report could make investors feel that Disney will be just fine if the potential transaction falls through. A rough quarter out of Disney would make the asset sale a more pressing matter. 

Image source: Disney.

Diving into the numbers  

Analysts aren't holding out for much in Thursday afternoon's report. Wall Street pros see revenue of $13.27 billion for the quarter, 1% ahead of where it was a year ago. They also see a profit per share of $1.14, just ahead of the $1.10 it rang up a year earlier -- but back out Disney's aggressive share buybacks over the past year and net income will likely be flat, if not slightly negative.

Sales and earnings-per-share (EPS) growth will still be applause-worthy if Disney makes it happen. Disney has posted declining revenue in three of the past four quarters. Net income has retreated in two of the past three quarters. 

Disney's segments are coming under fire. Disney's largest segment -- media networks -- is struggling as weakness at ESPN and cord-cutters kissing Disney's other cable networks goodbye are more than offsetting modest gains with its broadcasting business. Disney's media networks segment posted a double-digit percentage decline in operating profit last time out. 

Disney's theme parks business fared better in the second quarter as increased revenue per guest at its domestic theme parks helped offset flattish attendance and a decline in occupied room nights at Disney World. Another factor helping fuel top-line growth at Disney's theme parks division over the past few quarters is the Shanghai Disneyland opening that took place in mid-June of last year, but that tailwind is over now that Disney's financials are being compared to a quarter with the Chinese resort already in operation. Hurricane-related closures and vacation cancellations in Florida won't help this time around. 

Disney's studio segment has been struggling relative to its strong showing the past two years, but investors will likely overlook any shortfall there in anticipation of next month's release of Star Wars: The Last Jedi

The Twenty-First Century Fox fireworks or lack thereof may be driving the stock early this week, but Disney will ultimately need to prove that it can excel at most if not all of its segments if it wants to keep trading in the triple digits.

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Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.