Earning Scorecard: Scripps Networks

Scripps Networks Interactive, Inc. ( SNI - Analyst Report ) reported mixed financial results in the third quarter of 2011, with total revenue missing but earnings in line with the Zacks Consensus Estimates.

Third Quarter Highlights

Quarterly consolidated revenue of $503.7 million was up 7.9% year over year, but remained below the Zacks Consensus Estimate of $510 million. Quarterly GAAP net income from continuing operation was $98.6 million or 65 cents per share compared with $101.7 million or 61 cents per share in the prior-year quarter. The third quarter 2011 EPS of 65 cents was exactly in line with the Zacks Consensus Estimate.

Operating margin in the reported quarter was 38.9% compared with 41.8% in the prior-year quarter.

Agreements of Analysts

Of the 14 analysts covering the stock in the last 7 days, none revised their estimates for the fourth quarter of 2011. Similarly, for the first quarter of 2012, none out of the five analysts revised their estimates.

Out of the 11 and 15 analysts, covering the stock for fiscal 2011 and fiscal 2012, respectively, none revised their estimates during the last 7 days.

The current Zacks Consensus EPS Estimate for the fourth quarter of 2011 is pegged at 81 cents. The projected annual growth rate is 18.70%. Similarly, for the first quarter of 2012, the current Zacks Consensus EPS Estimate of 71 cents indicates a year-over-year gain of 14.19%.

Magnitude of Estimate Revisions

For the fourth quarter of 2011 and first quarter of 2012, during the last 7 days, the current Zacks Consensus Estimates remained unchanged at 81 and 71 cents, respectively. Likewise, for fiscal 2011 and 2012, the current Zacks Consensus Estimates remained flat at $2.83 and $3.21 per share, respectively, in the last 7 days.

Earning Surprises

With respect to earnings surprises, the company has produced an average earnings surprise of 5.02% over the trailing four quarters. In the last quarter, Scripps Networks reported EPS of 65 cents, which was in line with the Zacks Consensus Estimate.

The ongoing quarter contains an upside potential of (essentially a proxy for future earnings surprises) 2.47% while the next quarter reflects 0.00% upside potential. For fiscal 2011 and 2012, the growth potentials are 0.35% and 0.94%, respectively.

Our Recommendation

Despite stiff competition from other media companies like Discovery Communications Inc. ( DISCA - Snapshot Report ) and Crown Media Holdings, Inc. ( CRWN ) , we believe both advertising revenue and affiliate fee revenue will remain healthy in the near term due to the upcoming holiday season.

We, thus, maintain our long-term Neutral recommendation for Scripps Networks. Currently, Scripps Networks has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

About Earnings Estimate Scorecard

Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at: http://www.zacks.com/education/