It's been a mediocre week for The E.W. Scripps Company (NASDAQ:SSP) shareholders, with the stock dropping 12% to US$14.71 in the week since its latest first-quarter results. It looks like a credible result overall - although revenues of US$566m were what the analysts expected, E.W. Scripps surprised by delivering a (statutory) profit of US$0.10 per share, an impressive 25% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from E.W. Scripps' four analysts is for revenues of US$2.64b in 2022, which would reflect a meaningful 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 205% to US$3.01. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.65b and earnings per share (EPS) of US$3.29 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The average price target fell 5.5% to US$24.75, with reduced earnings forecasts clearly tied to a lower valuation estimate. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on E.W. Scripps, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$20.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of E.W. Scripps'historical trends, as the 20% annualised revenue growth to the end of 2022 is roughly in line with the 23% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.7% per year. So although E.W. Scripps is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple E.W. Scripps analysts - going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 4 warning signs we've spotted with E.W. Scripps (including 1 which is potentially serious) .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.