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Rogers Communication (RCI) Down 2.3% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Rogers Communication, Inc. (RCI - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Rogers Communications Q1 Earnings Beat, Revenues Miss
Rogers Communications Inc. the largest integrated telecom operator in Canada, reported mixed financial results for the first quarter of 2017, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line missed the same.
Net Income
Quarterly net income was approximately $222.1 million compared with $173.74 million in the year-ago quarter. Adjusted earnings per share of $0.46 were above the Zacks Consensus Estimate of $0.43.
Revenue
Quarterly total revenue came in at around $2,521.8 million, up 6.61% year over year but below the Zacks Consensus Estimate of $2,523.8 million.
Operating Metrics
Total operating costs in the first quarter of 2017 came in at $1,650.55 million versus $1,628.64 million in the first quarter of 2016. Adjusted operating profit was $880.79 million compared with $831.69 million in the year-ago quarter. Quarterly adjusted operating profit margin was 34.9% versus 33.9% with the year-ago quarter.
Cash Flow
During the first quarter of 2017, Rogers Communications generated $450.22 million of cash from operations compared with $451.73 million at the end of Mar 2016. Free cash flow was $255.33 million compared with $166.19 million in the year-ago quarter.
Liquidity
In the first quarter of 2017, change in the cash and cash equivalents on Rogers Communications’ balance sheet came in at $16.62 million. Total outstanding long-term debt was approximately $12,445.22 million compared with $12,571.37 million at the end of Dec 2016.
Wireless Segment
Quarterly total revenue came in at around $1,486.63 million, up 4% year over year. Service revenues totaled $1,396.73 million, up 7% from the year-ago quarter. Equipment sales were $89.89 million, down 24% year over year.
Quarterly adjusted operating profit for the segment was $614.14 million, up 7% year over year. Adjusted operating profit margin was 44%, flat with the year-earlier quarter.
Quarterly blended ARPU (average revenue per user) was $45.29, up 2.43% year over year. As of Mar 31, 2017, the prepaid subscriber base totaled 1.675 million, up 5.55% from the year-ago quarter. Monthly churn rate was 3.74% compared with 3.65% in the prior-year quarter.
As of Mar 31, 2017, Rogers Communications’ postpaid wireless subscriber base totaled 8.617 million. In the first quarter, the company added a net of 60,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $90.35, up 6.58% year over year. The monthly churn rate was 1.10% versus 1.17% in the year-ago quarter.
Cable Segment
Quarterly total revenue came in at $645.87 million, down 0.12% year over year. Service revenues totaled $644.36 million, flat year over year. Of this, Internet revenues were $292.34 million, up 8% year over year. Television (Video) revenues were $283.28 million, down 5% year over year. Telephony revenues totaled $68.74 million, down 8% year over year. Equipment sales were $1.51 million, flat year over year.
Quarterly adjusted operating profit for the segment was $296.12 million, down 0.25% year over year. Adjusted operating margin was 45.8% compared with 45.9% in the year-ago quarter.
As of Mar 31, 2017, the high-speed Internet subscriber count was 2.175 million. Rogers Communications added a net of 14,000 high-speed Internet customers in the quarter. Video subscriber base totaled 1.796 million, after a loss of 2,000 users. Telephony subscriber count was 1.096 million. The company lost 12,000 telephony subscribers in the reported quarter.
Media Segment
Quarterly total revenue came in at $358.1 million, up 6% year over year. Quarterly operating expenses rose 1% year over year to $379.21 million. Adjusted operating profit margin came in at negative 5.9% versus 10.9% with the year-ago quarter.
Business Solutions Segment
Quarterly total revenue came in at $71.76 million, down 1% year over year. Of the total, next-generation revenues were $58.92 million, up 4%. Legacy revenues were $11.33 million, down 25%, service revenues were $70.25 million down 2% while Equipment revenues were $1.51 million, up 100%. Quarterly adjusted operating profit was $23.42 million, flat year over year. Adjusted operating margin was 32.6% compared with 32.3% in the year-ago quarter.
Cash Dividend Payment
Rogers Communications’ efforts to reward its shareholders with quarterly cash dividends were impressive. The board of directors declared a quarterly dividend of $0.48 per share on each of its outstanding Class B non-Voting shares and Class A Voting shares. The dividend will be paid on Jul 4, 2017 to shareholders of record on Jun 12, 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
At this time, Rogers Communication's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of this revision indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an in line return from the stock in the next few months.
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Rogers Communication (RCI) Down 2.3% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Rogers Communication, Inc. (RCI - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Rogers Communications Q1 Earnings Beat, Revenues Miss
Rogers Communications Inc. the largest integrated telecom operator in Canada, reported mixed financial results for the first quarter of 2017, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line missed the same.
Net Income
Quarterly net income was approximately $222.1 million compared with $173.74 million in the year-ago quarter. Adjusted earnings per share of $0.46 were above the Zacks Consensus Estimate of $0.43.
Revenue
Quarterly total revenue came in at around $2,521.8 million, up 6.61% year over year but below the Zacks Consensus Estimate of $2,523.8 million.
Operating Metrics
Total operating costs in the first quarter of 2017 came in at $1,650.55 million versus $1,628.64 million in the first quarter of 2016. Adjusted operating profit was $880.79 million compared with $831.69 million in the year-ago quarter. Quarterly adjusted operating profit margin was 34.9% versus 33.9% with the year-ago quarter.
Cash Flow
During the first quarter of 2017, Rogers Communications generated $450.22 million of cash from operations compared with $451.73 million at the end of Mar 2016. Free cash flow was $255.33 million compared with $166.19 million in the year-ago quarter.
Liquidity
In the first quarter of 2017, change in the cash and cash equivalents on Rogers Communications’ balance sheet came in at $16.62 million. Total outstanding long-term debt was approximately $12,445.22 million compared with $12,571.37 million at the end of Dec 2016.
Wireless Segment
Quarterly total revenue came in at around $1,486.63 million, up 4% year over year. Service revenues totaled $1,396.73 million, up 7% from the year-ago quarter. Equipment sales were $89.89 million, down 24% year over year.
Quarterly adjusted operating profit for the segment was $614.14 million, up 7% year over year. Adjusted operating profit margin was 44%, flat with the year-earlier quarter.
Quarterly blended ARPU (average revenue per user) was $45.29, up 2.43% year over year. As of Mar 31, 2017, the prepaid subscriber base totaled 1.675 million, up 5.55% from the year-ago quarter. Monthly churn rate was 3.74% compared with 3.65% in the prior-year quarter.
As of Mar 31, 2017, Rogers Communications’ postpaid wireless subscriber base totaled 8.617 million. In the first quarter, the company added a net of 60,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $90.35, up 6.58% year over year. The monthly churn rate was 1.10% versus 1.17% in the year-ago quarter.
Cable Segment
Quarterly total revenue came in at $645.87 million, down 0.12% year over year. Service revenues totaled $644.36 million, flat year over year. Of this, Internet revenues were $292.34 million, up 8% year over year. Television (Video) revenues were $283.28 million, down 5% year over year. Telephony revenues totaled $68.74 million, down 8% year over year. Equipment sales were $1.51 million, flat year over year.
Quarterly adjusted operating profit for the segment was $296.12 million, down 0.25% year over year. Adjusted operating margin was 45.8% compared with 45.9% in the year-ago quarter.
As of Mar 31, 2017, the high-speed Internet subscriber count was 2.175 million. Rogers Communications added a net of 14,000 high-speed Internet customers in the quarter. Video subscriber base totaled 1.796 million, after a loss of 2,000 users. Telephony subscriber count was 1.096 million. The company lost 12,000 telephony subscribers in the reported quarter.
Media Segment
Quarterly total revenue came in at $358.1 million, up 6% year over year. Quarterly operating expenses rose 1% year over year to $379.21 million. Adjusted operating profit margin came in at negative 5.9% versus 10.9% with the year-ago quarter.
Business Solutions Segment
Quarterly total revenue came in at $71.76 million, down 1% year over year. Of the total, next-generation revenues were $58.92 million, up 4%. Legacy revenues were $11.33 million, down 25%, service revenues were $70.25 million down 2% while Equipment revenues were $1.51 million, up 100%. Quarterly adjusted operating profit was $23.42 million, flat year over year. Adjusted operating margin was 32.6% compared with 32.3% in the year-ago quarter.
Cash Dividend Payment
Rogers Communications’ efforts to reward its shareholders with quarterly cash dividends were impressive. The board of directors declared a quarterly dividend of $0.48 per share on each of its outstanding Class B non-Voting shares and Class A Voting shares. The dividend will be paid on Jul 4, 2017 to shareholders of record on Jun 12, 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Rogers Communication, Inc. Price and Consensus
Rogers Communication, Inc. Price and Consensus | Rogers Communication, Inc. Quote
VGM Scores
At this time, Rogers Communication's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of this revision indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an in line return from the stock in the next few months.