We expect Scripps Networks Interactive, Inc. (SNI) to report better-than-expected fourth-quarter 2014 earnings on Feb 12, 2015. Results will be declared prior to the commencement of trading on the day.
Why a Likely Positive Surprise?
Our proven model shows that the company is poised to beat earnings this quarter as it has the right combination of 2 key components:
Zacks ESP: The company currently has an Earnings ESP of +1.06%. This is because the Zacks Consensus Estimate currently stands at 94 cents, while the Most Accurate Estimate is pegged higher at 95 cents.
Zacks Rank: Scripps Networks carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 have a higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Scripps Networks’ Zacks Rank #3 and +1.06% earnings ESP makes us confident of an earnings beat at the company.
What's Driving the Better-than-Expected Earnings?
Scripps Networks has a healthy track record with respect to earnings. The company has delivered positive earnings surprises in three of the last four quarters, with an average beat of 2.95%. We are also encouraged by the lifestyle media company’s efforts to reward shareholders through dividends and share repurchases. This should boost the bottom line. However, increased service and selling expenses in the quarter are expected to hurt earnings in the final quarter of 2014.
Meanwhile, advertising revenues and affiliate fees at its flagship Lifestyle Media business are expected to be strong in the fourth quarter of 2014. This should significantly benefit the top line. We are also impressed by the company’s efforts to expand its reach in Europe and Asia through a series of takeovers. Scripps Networks is rolling out a series of websites and mobile applications through which subscribers can view the company’s channels on mobile devices. We also expect the company to provide guidance for 2015 on the earnings conference call.
Other Stocks to Consider
Scripps Networks is not the only company looking up this earnings season. The following stocks are also likely to beat earnings in the upcoming quarter
AMC Networks Inc. (AMCX), has an Earnings ESP of +6.86% and a Zacks Rank #3. The company is scheduled to release earnings on Feb 26.
Grupo Televisa, S.A.B. (TV), has an Earnings ESP of +13.51% and a Zacks Rank #3. The company is expected to release earnings on Feb 20.
Cablevision Systems Corp. (CVC), has an Earnings ESP of +11.11% and a Zacks Rank #3. The company is scheduled to release earnings on Feb 25.
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