Scripps Networks Interactive (SNI) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Scripps Networks Interactive ( SNI) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Scripps Networks Interactive as such a stock due to the following factors:

  • SNI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $64.2 million.
  • SNI has traded 257,888 shares today.
  • SNI traded in a range 202.1% of the normal price range with a price range of $3.01.
  • SNI traded above its daily resistance level (quality: 31 days, meaning that the stock is crossing a resistance level set by the last 31 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on SNI:

Scripps Networks Interactive, Inc. develops lifestyle-oriented content for television and the Internet markets in the United States and internationally. It delivers entertaining and useful content that focuses on specifically defined topics of interest for audiences and advertisers. The stock currently has a dividend yield of 0.8%. SNI has a PE ratio of 16.7. Currently there are 4 analysts that rate Scripps Networks Interactive a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Scripps Networks Interactive has been 905,100 shares per day over the past 30 days. Scripps Networks Interactive has a market cap of $8.7 billion and is part of the services sector and media industry. The stock has a beta of 1.15 and a short float of 3.1% with 2.18 days to cover. Shares are down 10.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Scripps Networks Interactive as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • SNI's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.70, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 4.29, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, SCRIPPS NETWORKS INTERACTIVE's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has increased to $255.31 million or 36.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.38%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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