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Shaw Communications (SJR) Q2 Earnings: What's in Store?

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Shaw Communications Inc. is scheduled to release second-quarter (ended Feb 28, 2017) fiscal 2017 results before the opening bell on Apr 12.

Last quarter, Shaw Communications posted a negative earnings surprise of 43.48%. Moreover, the company’s earnings lagged the Zacks Consensus Estimate in three of the previous four quarters, with an average miss of 10.04%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

We are impressed with Shaw Communications’ ongoing efforts to reward its shareholders through dividend payments. On Jan 12, 2017, the board of directors of Shaw Communications declared monthly dividends of $0.09875 on the Class B Non-Voting Participating Shares and $0.098542 on Class A Participating Shares. The dividends were paid on Mar 30, 2017, to holders of record at the closure of business on Mar 15, 2017. The same dividends will again be paid on Apr 27, 2017 and May 30, 2017 to holders of record at the closuree of business on Apr 13, 2017 and May 15, 2017.

Shaw Communications had already placed itself as a pure-play Canadian telecom company following the divesture of its subsidiary Shaw Media to Corus Entertainment. The launch of mobile TV platform FreeRange TV, its SmartWiFi and SmartSecurity Services, and high-speed Internet services like WideOpen Internet 150 bode well for the company’s wired and wireless networks' business in the to-be reported quarter.

We also look forward to how the company’s decision to rebrand its wireless services affects subscriber count in the upcoming quarterly results. Meanwhile, Shaw Communications’ plans to launch an innovative voice-controlled television product, in association with Comcast Corp.'s X1 technology should help it regain market share in the western parts of Canada.

In spite of such positives, shares of Shaw Communications failed to beat the Zacks-categorized Cable TV industry’s performance over the past three months. The stock declined 3.1% while the industry registered growth of 9.8%.

Meanwhile, the company operates in a highly competitive Canadian wireless market with incumbents like Rogers Communications Inc. (RCI - Free Report) , TELUS Corp. (TU - Free Report) and BCE Inc. (BCE - Free Report) . Stiff competition has resulted in loss in its video, Internet and landline phone business line. Moreover, high debts, escalating capital expenditure, a deteriorating cash position, expenses related to the rolling out of new brands, and promotional costs are likely to adversely impact margins in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Shaw Communications is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP : Shaw Communications has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with the Earnings ESP Filter.

Zacks Rank : Shaw Communications has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Shaw Communications Inc. Price and EPS Surprise

 

Shaw Communications Inc. Price and EPS Surprise | Shaw Communications Inc. Quote

A Key Pick

Comcast Corp. (CMCSA - Free Report) from the Zacks categorized broader Consumer Discretionary sector has the right combination of elements to post an earnings beat when it reports first-quarter fiscal 2017 results on Apr 27, 2017. Comcast has an Earnings ESP of +2.27% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comcast’s earnings surpassed the Zacks Consensus Estimate in one of the previous four quarters, with an average beat of 1.25%.

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