Scripps Networks Aided By Strong Ad Sales; Risks Remain

Published 08/25/2016, 05:28 AM
Updated 07/09/2023, 06:31 AM
TWX
-
SNI
-
CHTR
-
LINC
-

We issued an updated research report on the Cincinnati, OH-based Scripps Networks Interactive Inc. (NASDAQ:SNI) on Aug 23.

Strong Advertising Sales in Q2

Scripps Networks reported mixed results in the second quarter of 2016; with earnings beating estimates while revenues missing the same. The bottom line expanded 7.5% on a year-over-year basis. The top line surged 21.9%. Advertising revenues in the US Networks division exceeded the $500 million level for the first time, exhibiting the strength of the advertising market for the company’s lifestyle offerings. US Advertisement revenues climbed nearly 9% in the quarter which was more than the growth displayed by its peers like Time Warner Inc. (NYSE:TWX) .

We are impressed by Scripps Networks’ strategy of growth through acquisitions. In a bid for further expansion, the company completed the remaining 35% stake buy in Travel Channel Media from Cox Communications earlier this year. Moreover, to reinforce its position in the European market as well as to enhance its advertising business, Scripps Networks acquired Poland’s popular multi-platform media company, TVN, last year. We are also encouraged by the policy of Scripps Networks to reward its shareholders through dividends.

Headwinds

We are, however, concerned about the high debt levels of the company. Scripps Networks exited the second-quarter 2016 with $185.9 million in cash & cash equivalents and $2,877.5 million of outstanding debt (less current portion). The debt-to-capitalization ratio stood at a high 0.57.

Moreover, mounting programming costs and foreign currency exchange rate risks continue to pose threats for the company.

Zacks Rank and Stocks to Consider

Scripps Networks currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Consumer Discretionary sector include Charter Communications Inc. (NASDAQ:CHTR) and Lincoln Educational Services Corp. (NASDAQ:LINC) . Both the stocks sport a Zacks Ranks #1( Strong Buy).



TIME WARNER INC (TWX): Free Stock Analysis Report

SCRIPPS NETWRKS (SNI): Free Stock Analysis Report

LINCOLN EDUCATL (LINC): Free Stock Analysis Report

CHARTER COMM-A (CHTR): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.