(DISH) DISH Network Earnings Scorecard

Following the first quarter earnings announcement on May 3, a mixed sentiment was palpable among the analysts covering DISH Network Corp. (DISH) with regard to estimate revision. We believe that the mixed sentiment stems from stiff competition that exists in the satellite and cable market.

First Quarter Highlights

Quarterly GAAP net income was $360.31 million or 80 cents per share compared with $549.4 million or $1.22 per share in the year-ago quarter. First-quarter 2012 EPS of 80 cents was ahead of the Zacks Consensus Estimate of 70 cents.

Quarterly total revenue increased 11.1% to $3.58 billion from $3.2 billion in the year-ago quarter. This was mainly due to an increase in subscriber related revenue and contribution from Blockbuster. However, first quarter revenue fell below the Zacks Consensus Estimate of $3.63 billion.

Agreements of Analysts

Out of the 15 analysts covering the stock in the last 7 days, four analysts raised the estimate for the second quarter of 2012, but six analysts reduced. For the third quarter of 2012, out of the 14 analysts, four analysts raised the EPS estimate but four analysts slashed estimates over the last 7 days.

For fiscal 2012, out of the 14 analysts, 10 analysts increased the estimates while only one reduced the same. However, for 2013, two analysts revised the estimate upward while nine moved in the opposite direction.

Currently, the Zacks Consensus EPS Estimate for the second quarter of 2012 is pegged at 72 cents. The projected annual decline rate is 3.56%. Similarly, for the third quarter, the current Zacks Consensus EPS Estimate of 66 cents reflects a year-over-year decrease of 7.04%.

Magnitude of Estimate Revisions

Over the last 7 days, the Zacks Consensus Estimate for the second quarter of 2012 dropped by 3 cents from the earlier estimate of 75 cents. However, for the third quarter of fiscal 2012, the Zacks Consensus Estimate was just a penny above the earlier estimate of 65 cents.

For fiscal 2012, the estimate was 5 cents above the previous estimate of $2.75 in the last 7 days, while in fiscal 2013, the current estimate was 7 cents below the prior estimate of $2.94.

Earning Surprises

In the last quarter, DISH Network produced an earnings surprise of 10 cents or 14.29%.

The current Zacks Consensus Estimates for the second and third quarters of 2012 reflect 0.00% earning surprise (indicating that the company should report in line with estimates in both quarters).

However, fiscal 2012 and 2013 reflect downside potential of 0.36% and 0.70%, respectively.

Our Recommendation

Huge subscriber gain, continuous product launch and strong balance sheet will act as strong catalysts for growth for the company.

However, increasing content cost and stiff competition from other cable and satellite TV’s like Time Warner Cable (TWC) and DirecTV (DTV) as well as from other online network companies will act as strong headwinds for the company going forward. We, therefore, maintain our long-term Neutral recommendation on Dish Network.

Currently, Dish Network has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

About Earnings Estimate Scorecard

As a PhD from MIT, Len Zacks proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at: http://www.zacks.com/education/

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