Scripps Networks Interactive, Inc. SNI is scheduled to release first-quarter 2017 financial numbers on May 4, before the opening bell.
In the last quarter, the company posted a negative earnings surprise of 2.86%. The company’s earnings (excluding special items) of $1.02 per share fell short of the Zacks Consensus Estimate of $1.05. Also, the bottom line declined 24.4% on a year-over-year basis due to higher costs. The company’s fourth-quarter operating revenues of $888.7 million beat the Zacks Consensus Estimate of $881.2 million. Revenues were up 4.3% year over year on strong TV advertising revenues in the U.S.
Shares of Scripps Networks underperformed the Zacks categorized Broadcast Radio and Television industry over the last three months. The stock lost 1.35% while the industry gained 7.34%.
Factors at Play
Scripps Networks is highly exposed to foreign currency exchange rate risks due to its presence in Europe and Asia. Moreover, acquisition of other media companies will also lead to integration risk for the company. Headwinds like mounting programming costs might hurt the stock in the first quarter.Additionally, the lifestyle programming market is highly competitive. Scripps Networks is a highly leveraged company. This is indicated by the fact that the ratio of its long-term debt-to-equity (expressed as a percentage) is currently well over 100. This compares unfavorably with the figure of 82.37% for the S&P 500 index.
However, we are impressed by the company's decision made in February to hike its quarterly dividend by 20%.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Scripps Networksthis quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Scripps Networks has an earnings ESP of -0.85%. This is because the Most Accurate estimate is pegged at $1.17 per share, while the Zacks Consensus Estimate is $1.18. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Scripps Networks has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.