Sunday, May 30, 2010

Scripps Network (SNI) - Growth & Income

Scripps Network Interactive
Scripps Networks Interactive (SNI) operates popular TV networks including HGTV, Food Network, and Travel Channel. These media properties are generating high ratings, and that translates to healthy advertising rates and strong revenue growth.

Growth and Income

The company is expected grow it EPS 24.4% in 2010, 16.4% in 2011, and 14.8% per year for the next 3 to 5 years. The stock also offers investors a dividend yield of 0.7%.

This Zacks #2 Rank stock trades at 21.2x 2010 consensus EPS estimates and 18.1x 2011 consensus EPS estimates.

Strong First-Quarter Results

On April 27, the company announced consolidated revenue of $469 million, an increase of 32%. Excluding Travel Channel, which was acquired Dec 15, 2009, consolidated revenue increased 16%. Scripps earned $0.50 per share, topping the Zacks Consensus Estimate by 7 cents, or 16.3%.

Company Outlook

The company essentially maintained its previous guidance. It expects affiliate fee revenue of $530-540 million, programming expenses of $380-400 million, and non-programming expenses (which were reduced slightly) of $545-560 million.

Estimates

The company's strong first-quarter results and management guidance prompted analysts to boost their estimates for 2010 and 2011. In the last 30 days, the Zacks Consensus Estimate for 2010 is up 8 cents, or 3.9%, to $2.15, and the 2011 Zacks Consensus Estimate is up 14 cents, or 5.9%, to $2.51.

The company has beaten the Zacks Consensus by an average of 7.6% in each of the last five quarters.

The Chart

After bottoming around $27 in July 2009, SNI shares are up 67%. The stock experienced a sharp sell-off in February, dropping over 16%. However, the stock recovered nicely, making a new high on May 12.

SNI went through another sharp pullback in May, losing about 9%, but the stock has already pared some of those losses. It now trades just about 5% below its 52-week high.

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