We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Rogers Communication (RCI) Up 4.2% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Rogers Communication (RCI - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Rogers Communication due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Rogers Communications Q3 Earnings Drives on Wireless Growth
Rogers Communications reported adjusted earnings of 93 cents per share that beat the Zacks Consensus Estimate by a nickel. Moreover, total revenues of $2.88 billion lagged the consensus mark of $2.90 billion.
Adjusted earnings increased 13.1% year over year to C$1.21 per share. Total revenues climbed 3.4% to C$3.77 billion primarily driven by wireless service revenue growth.
Wireless Details (In C$)
Wireless (61.8% of total revenues) increased 5.8% from the year-ago quarter to C$2.33 billion. Service revenues climbed 4.6% and equipment revenues were up 10.8% in the quarter.
Blended ARPU (average revenue per user) was C$57.2, up from C$55.8 in the year-ago quarter and C$55.6 in the previous quarter.
As of Oct 19, prepaid subscriber base totaled almost 1.77 million, a gain of 60K sequentially but a loss of 21K subscribers from the year-ago quarter. Monthly churn rate was 3.48% compared with 3.04% in the year-ago quarter.
As of Oct 19, postpaid wireless subscriber base totaled roughly 9.05 billion, a subscriber gain of 206K from the year-ago quarter and 124K from the previous quarter. Monthly churn rate declined to 1.09% from 1.16% in the year-ago quarter but increased from 1.01% in the previous quarter.
Rogers Communications continues to expand LTE coverage. The company announced plans to launch LTE-M in Ontario. LTE-M will improve expertise in 5G, IT, and network across consumer and enterprise.
In the current quarter, Rogers Communications entered into a multimillion-dollar partnership with University of British Columbia (UBC) to co-develop a made-in-Canada 5G ecosystem.
Segment operating expense increased 3.9% from the year-ago quarter to C$1.2 billion.
Adjusted EBITDA increased 8.1% year over year to C$1.1 billion. Adjusted EBITDA margin expanded 90 basis points (bps) on a year-over-year basis to 47.1% primarily attributed to higher revenues and stringent cost control.
Cable Details (In C$)
Cable (26.1% of total revenues) inched up 0.6% from the year-ago quarter to C$983 million. Service revenues climbed 0.6%, while equipment revenues remained flat from the year-ago quarter.
While Internet revenues increased 7.9%, television and phone revenues declined 5.3% and 12.9%, respectively.
As of Oct 19, 2018, Internet subscriber count was nearly 2.41 million, a gain of 104K from the year-ago quarter and 35K from second-quarter 2018.
Management stated that its offering of Ignite Gigabit Internet over the entire Cable footprint continued to attract customers. Further, the company stated that the launch of Ignite TV is driving ARPA.
Per management, Ignite TV can be integrated with streaming services like Netflix and Alphabet’s YouTube. Also, users can integrate with Amazon’s Prime in near future.
Rogers Communications lost 52K subscribers on a year-over-year basis and 18K subscribers sequentially to reach an installed base of almost 1.7 million in the Television segment.
Phone subscriber count was nearly 1.12 million, a gain of 21K from the year-ago quarter and remained same from second-quarter 2018.
Segment operating expense decreased 2.6% from the year-ago quarter to C$493 million.
Adjusted EBITDA increased 4% year over year to C$490 million driven by favorable product mix shift toward higher margin Internet services and other cost-efficiencies attained. Adjusted EBITDA margin expanded 160 bps on a year-over-year basis to 49.8%.
Media Details (In C$)
Media (12.9% of total revenues) decreased 5.4% from the year-ago quarter to C$488 million due to lower revenues to the Toronto Blue Jays.
Segment operating expense decreased 8.8% from the year-ago quarter to C$415 million.
Adjusted EBITDA increased 19.7% from the year-ago quarter to C$73 million due to cost efficiencies achieved by the company. Adjusted EBITDA margin expanded 320 bps on a year-over-year basis to 15%.
Consolidated Results
Operating costs increased 0.3% from the year-ago quarter to C$2.15 billion. As a percentage of revenues, operating costs declined 180 bps to 57%.
Adjusted EBITDA increased 7.8% from the year-ago quarter to C$1.6 billion. Adjusted EBITDA margin expanded 180 bps from the year-ago quarter, primarily owing to strong growth in wireless revenues and improving cost structure.
Cash Flow Details
Cash provided by operating activities decreased 5.3% year over year to C$1.3 billion due to “lower net funding provided by working capital items.” Moreover, free cash flow increased 5.2% year over year to C$550 million on the back of higher adjusted EBITDA.
Rogers Communications paid C$247 million in dividends and ended the third quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 2.5.
Full Year Guidance
Revenues are expected to increase in the range of 3 in the full year. Capital expenditures are expected in the range $2.7-$2.9 billion.
Management increased adjusted EBITDA and free cash flow guidance. Adjusted EBITDA is expected to increase in the range 7 from the prior range of 5. Free cash flow is expected to increase in the range 5 from the prior range of 3.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Rogers Communication has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Rogers Communication has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Rogers Communication (RCI) Up 4.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Rogers Communication (RCI - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Rogers Communication due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Rogers Communications Q3 Earnings Drives on Wireless Growth
Rogers Communications reported adjusted earnings of 93 cents per share that beat the Zacks Consensus Estimate by a nickel. Moreover, total revenues of $2.88 billion lagged the consensus mark of $2.90 billion.
Adjusted earnings increased 13.1% year over year to C$1.21 per share. Total revenues climbed 3.4% to C$3.77 billion primarily driven by wireless service revenue growth.
Wireless Details (In C$)
Wireless (61.8% of total revenues) increased 5.8% from the year-ago quarter to C$2.33 billion. Service revenues climbed 4.6% and equipment revenues were up 10.8% in the quarter.
Blended ARPU (average revenue per user) was C$57.2, up from C$55.8 in the year-ago quarter and C$55.6 in the previous quarter.
As of Oct 19, prepaid subscriber base totaled almost 1.77 million, a gain of 60K sequentially but a loss of 21K subscribers from the year-ago quarter. Monthly churn rate was 3.48% compared with 3.04% in the year-ago quarter.
As of Oct 19, postpaid wireless subscriber base totaled roughly 9.05 billion, a subscriber gain of 206K from the year-ago quarter and 124K from the previous quarter. Monthly churn rate declined to 1.09% from 1.16% in the year-ago quarter but increased from 1.01% in the previous quarter.
Rogers Communications continues to expand LTE coverage. The company announced plans to launch LTE-M in Ontario. LTE-M will improve expertise in 5G, IT, and network across consumer and enterprise.
In the current quarter, Rogers Communications entered into a multimillion-dollar partnership with University of British Columbia (UBC) to co-develop a made-in-Canada 5G ecosystem.
Segment operating expense increased 3.9% from the year-ago quarter to C$1.2 billion.
Adjusted EBITDA increased 8.1% year over year to C$1.1 billion. Adjusted EBITDA margin expanded 90 basis points (bps) on a year-over-year basis to 47.1% primarily attributed to higher revenues and stringent cost control.
Cable Details (In C$)
Cable (26.1% of total revenues) inched up 0.6% from the year-ago quarter to C$983 million. Service revenues climbed 0.6%, while equipment revenues remained flat from the year-ago quarter.
While Internet revenues increased 7.9%, television and phone revenues declined 5.3% and 12.9%, respectively.
As of Oct 19, 2018, Internet subscriber count was nearly 2.41 million, a gain of 104K from the year-ago quarter and 35K from second-quarter 2018.
Management stated that its offering of Ignite Gigabit Internet over the entire Cable footprint continued to attract customers. Further, the company stated that the launch of Ignite TV is driving ARPA.
Per management, Ignite TV can be integrated with streaming services like Netflix and Alphabet’s YouTube. Also, users can integrate with Amazon’s Prime in near future.
Rogers Communications lost 52K subscribers on a year-over-year basis and 18K subscribers sequentially to reach an installed base of almost 1.7 million in the Television segment.
Phone subscriber count was nearly 1.12 million, a gain of 21K from the year-ago quarter and remained same from second-quarter 2018.
Segment operating expense decreased 2.6% from the year-ago quarter to C$493 million.
Adjusted EBITDA increased 4% year over year to C$490 million driven by favorable product mix shift toward higher margin Internet services and other cost-efficiencies attained. Adjusted EBITDA margin expanded 160 bps on a year-over-year basis to 49.8%.
Media Details (In C$)
Media (12.9% of total revenues) decreased 5.4% from the year-ago quarter to C$488 million due to lower revenues to the Toronto Blue Jays.
Segment operating expense decreased 8.8% from the year-ago quarter to C$415 million.
Adjusted EBITDA increased 19.7% from the year-ago quarter to C$73 million due to cost efficiencies achieved by the company. Adjusted EBITDA margin expanded 320 bps on a year-over-year basis to 15%.
Consolidated Results
Operating costs increased 0.3% from the year-ago quarter to C$2.15 billion. As a percentage of revenues, operating costs declined 180 bps to 57%.
Adjusted EBITDA increased 7.8% from the year-ago quarter to C$1.6 billion. Adjusted EBITDA margin expanded 180 bps from the year-ago quarter, primarily owing to strong growth in wireless revenues and improving cost structure.
Cash Flow Details
Cash provided by operating activities decreased 5.3% year over year to C$1.3 billion due to “lower net funding provided by working capital items.” Moreover, free cash flow increased 5.2% year over year to C$550 million on the back of higher adjusted EBITDA.
Rogers Communications paid C$247 million in dividends and ended the third quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 2.5.
Full Year Guidance
Revenues are expected to increase in the range of 3 in the full year. Capital expenditures are expected in the range $2.7-$2.9 billion.
Management increased adjusted EBITDA and free cash flow guidance. Adjusted EBITDA is expected to increase in the range 7 from the prior range of 5. Free cash flow is expected to increase in the range 5 from the prior range of 3.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Rogers Communication has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Rogers Communication has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.