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Scripps Networks (SNI) Up on Stellar Q1 Earnings, Revenues

Scripps Networks Interactive Inc. SNI reported strong first-quarter 2016 financial numbers with earnings and revenues surpassing expectations.

Scripps Networks’ earnings (excluding special items) of $1.37 per share easily beat the Zacks Consensus Estimate of $1.01. Earnings also improved 34.3% on a year-over-year basis. The earnings beat came on the back of higher-than-expected revenues.

 

Scripps Networks reported operating revenues of $816.9 million which beat the Zacks Consensus Estimate of $787 million. Revenues were also up 24.1% on a year-over-year basis. The upbeat earnings performance was applauded by investors which resulted in the stock price rally.

First-quarter gross profit (on an adjusted basis) came in at $346.8 million, up 27.4%. Quarterly operating income (on a reported basis) climbed 28.4% year over year to $290 million. At the end of the reported quarter, the company has $322.7 million of cash from operations versus $274.6 million in the prior-year quarter. Free cash flow in the quarter stood at almost $222 million versus $170.5 million a year ago.

At the end of the quarter under review, Scripps Networks had $217 million in cash & marketable securities and $3,200.8 million of outstanding debt on its balance sheet compared with $223.4 million and $3,511.1 million, respectively, at the end of 2015. The debt-to-capitalization ratio stood at 0.60 versus 0.66 at the end of 2015. The company now expects profit on an adjusted basis to grow 8% as opposed to the earlier view of 7%.

Segmental Performance

U.S. Networks

 Quarterly revenues came in at $702.8 million, up 9.9%. Within this segment, Advertisement revenues climbed 13.7% year over year to $487.3 million. Distribution revenues were $202.1 million, up 2.2% year over year. Other revenues increased 2.3% year over year to $12.8 million. Segmental profits came in at $359.5 million, up 19.6% year over year.

Brand-wise, HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel, Digital Business and Other revenues improved 14.5%, 5.5%, 6.4%, 8.1%, 7.7%, 18.9% and 24.6% year over year, respectively. However, Great American Country revenues dropped 0.9% year over year.

International Networks

Quarterly total revenue of $121.4 million reflected a substantial increase from the year-ago figure of $24.1 million. Segmental profits came in at $9.8 million as against a loss of $5.9 million a year ago.

Zacks Rank & Stocks to Consider

Scripps Networks has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Entercom Communications Corp. ETM, Gray Television Inc. GTN and Sirius XM Holdings SIRI. Entercom sports a Zacks Rank #1 (Strong Buy) while Gray Television and Sirius XM Holdings carry a Zacks Rank #2 (Buy).

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