DISH Network Corp.(DISH) is scheduled to release its second quarter 2011 results on Tuesday, August 9, before the opening bell. The current Zacks Consensus Estimate for the second quarter is pegged at 77 cents per share, representing an annualized growth of 35.46%.
With respect to earnings surprises over the trailing four quarters, DISH has outperformed the Zacks Consensus Estimate in all the four quarters. The average earnings surprise was a positive 13.31%, implying that the company has outdone the Zacks Consensus Estimate by the same magnitude over the last four quarters.
First Quarter Highlights
On May 2, 2011, DISH reported its first quarter 2011 financial results. Quarterly GAAP net income was $549 million or $1.22 per share compared with a net income of $218.2 million or 52 cents per share in the prior-year quarter. Adjusted (excluding one-time items) EPS in the reported quarter was 72 cents, well above the Zacks Consensus Estimate of 68 cents per share. The strong performance was primarily attributable to higher total revenue and lower subscriber promotion subsidies, which declined by a whopping 27.7% year over year.
Quarterly total revenue increased 5.4% to $3,220.6 million from $3,056.7 million in the year-ago quarter. This was mainly due to higher subscriber related revenue. However, reported revenue missed the Zacks Consensus Estimate of $3,235 million. DISH Network gained 58,000 net subscribers during the reported quarter, thus raising its total subscriber base to 14.191 million on March 31, 2011.
Agreement of Estimate Revisions
In the last 30 days, out of the 14 analysts covering the stock for the second and third quarter of 2011, 3 analysts increased their EPS estimates while 2 analysts decreased their EPS estimates, respectively.
For fiscal 2011, over the last 30 days, out of the 11 analysts covering the stock, 1 analyst raised the EPS estimate while 1 moved in the opposite direction. Likewise, for fiscal 2012, out of the 15 analysts covering the stock, 6 analysts raised their EPS estimates but none reduced their EPS estimate for the period.
Magnitude of Estimate Revisions
During the last 30 days, the Zacks Consensus Estimate was 1 cent above the current estimate of 77 cents for second quarter 2011. However, for the next quarter of 2011, the Zacks Consensus Estimate was 3 cents below the current estimate of 67 cents. Similarly, for fiscal 2011, during the last 30 days, the Zacks Consensus Estimate was 5 cents below of the current estimate of $3.30. Likewise, for fiscal 2012, the Zacks Consensus Estimate was 8 cents shy of the current estimate of $2.88.
Earning Surprises
In the previous quarter, DISH Network reported EPS of 72 cents, which surpassed the Zacks Consensus Estimate by 4 cents. The current Zacks Consensus Estimate for the ongoing quarter contains a 1.30% downside potential while the same for the third quarter of fiscal 2011 reflects a 0.00% upside potential (essentially a proxy for future earning surprises). Similarly, for fiscal 2011, the Zacks Consensus Estimates reflects 0.91% downside potentials while, fiscal 2012 contain a growth potential of 3.82%.
Our Recommendation
Higher subscriber additions along with lower subscriber promotion subsidies are expected to drive the company’s top-line and bottom-line growth in the upcoming quarters. Moreover, the acquisition of Blockbuster will enable DISH Network to offer several movie streaming services over the Internet, thus allowing them to counter the competitive threats from cheap online movie distribution companies like Netflix, Inc. (NFLX) and Hulu.
We, thus, maintain our long-term Neutral recommendation for DISH Network. Currently, DISH Network has a Zacks #2 Rank, implying a short-term Buy rating on the stock.
