Major lifestyle media company Scripps Networks Interactive Inc. SNI is set to release its third-quarter 2015 results before the opening bell on Nov 9.
Last quarter, the company posted a 16.67% positive earnings surprise. Results were aided by low costs. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Scripps Networks is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: Scripps Networks’ Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.03%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Scripps Networks currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
Scripps Networks’ Zacks Rank #2 combined with a +1.03% ESP makes us reasonably confident of an earnings beat at the company.
What is Driving the Better-than-Expected Earnings?
Scripps Networks has an encouraging track record with respect to earnings. The company outshone the Zacks Consensus Estimate in all of the past four quarters, clocking an average earnings beat of 12%.
We are also impressed by the company’s efforts to control costs. Scripps Networks expects total revenue in the third quarter to grow in the high teens. Advertising revenue growth is also projected in the high teens, while affiliate revenues are expected to grow in the low teens. We believe the company will duly achieve its targets on the back of a strong product portfolio.
Moreover, Scripps Networks’ consistent efforts to reward shareholders through dividend payments are encouraging. We expect an update on the company’s dividend payouts and buyback plans on the third quarter conference call. Last month, the company completed its tender offer for all outstanding shares of Poland’s popular multi-platform media company, TVN. The acquisition of TVN has strengthened Scripps Networks’ presence in Europe considerably. An update on the company’s international operations is also expected on the third quarter call.
Other Stocks to Consider
Here are some companies that investors may consider as our model shows they too have the right combination of elements to post an earnings beat this quarter.
Viacom, Inc. VIAB has an earnings ESP of +0.66% and a Zacks Rank #3. The company will report quarterly results on Nov 12.
Campbell Soup Company CPB has an earnings ESP of +2.63% and a Zacks Rank #3. The company will report quarterly results on Nov 24.
Inter Parfums Inc. IPAR has an earnings ESP of +15.00% and a Zacks Rank #2. The company will report quarterly results on Nov 9.
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