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Scripps Networks (SNI) Down 2.4% Since Earnings Report: Can It Rebound?

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About a month has gone by since the last earnings report for Scripps Networks Interactive, Inc (SNI - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Second Quarter 2017 Earnings

Scripps Networks reported mixed results in the second quarter of 2017. The company’s earnings (excluding special items) of $1.79 per share surpassed the Zacks Consensus Estimate of $1.62. Also, the bottom line improved 26.06% on a year-over-year basis.

The company’s second-quarter operating revenues of $925 million fell short of the Zacks Consensus Estimate of $936 million. Revenues were up 3.6% year over year on strong TV advertising and distribution revenues in the U.S. Advertising revenues came in at $663.0 million, up 2.5% year over year, while Distribution revenues rose 7.3% to $239.7 million. On the other hand, Other revenues declined 1.5% year over year.

Second-quarter consolidated segment profits (on an adjusted basis) totaled $412.8 million, down 1.6% year over year. Quarterly operating income (on a reported basis) rose marginally to $374.08 million.

At the end of the second quarter of 2017, Scripps Networks had $131.6 million in cash & cash equivalents and $3.0 billion of debt on its balance sheet, compared with $122.9 million and $3.2 billion respectively, at the end of 2016.

Segmental Performance

U.S. Networks

Quarterly revenues came in at $779.0 million, up 3.6% year over year. Advertising revenues inched up 2.2% year over year to $552.7 million on continued strength in pricing in the U.S. advertising market for the company’s lifestyle offerings. Distribution revenues also increased 8.1% year over year to $211.9 million, driven by a rise in negotiated annual rate and revenues from new over-the-top distribution platforms.

Segmental (adjusted) profits came in at $398.7 million, down 1.5% year over year, driven by increase in expenses.

International Networks

Quarterly total revenue of $153.3 million was up 4.2% year over year. Segmental adjusted profits totaled $38.8 millioncompared with $37.4 million in the prior-year quarter.

Conversely, loss (adjusted) from the Corporate and Other segment widened to $24.7 million from $22.9 million a year ago.

Quarterly total revenue of $125.5 million was up 3.5% year over year. Segmental adjusted profits totaled $15.5 million, up 58.16% on the back of higher revenues.
 
Quarterly total revenue of $125.5 million was up 3.5% year over year. Segmental adjusted profits totaled $15.5 million, up 58.16% on the back of higher revenues.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in  fresh estimates. There has been one revision lower for the current quarter.

VGM Scores

At this time, Scripps Networks' stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.




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