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Why Is BCE (BCE) Up 10% Since Last Earnings Report?
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A month has gone by since the last earnings report for BCE (BCE - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BCE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BCE reported disappointing third-quarter 2020 results with both the bottom and the top line deteriorating on a year-over-year basis.
Net Income
Net earnings in the September quarter declined 20.2% year over year to C$692 million or C$0.77 per share. This deterioration was caused by higher other expenses and lower adjusted EBITDA on the back of elevated depreciation and amortization.
Adjusted net earnings came in at C$712 million ($534.3 million) or C$0.79 (59 cents) per share compared with C$812 million or C$0.91 per share in the prior-year quarter. Nevertheless, the bottom line beat the Zacks Consensus Estimate by a penny.
Revenues
This Canada-based telecommunications company’s total operating revenues dipped 2.6% year over year to C$5,787 million ($4,342.8 million). The downtick was mainly due to the adverse impact of the COVID-19 pandemic on BCE’s wireless roaming volumes, which induced reduced spending by business customers with sluggish demand for media advertising. The top line, however, surpassed the consensus estimate of $4,322 million.
Service revenues declined 4.2% to C$4,924 million on lower year-over-year wireless service and media revenues. Product revenues increased 8% to C$863 million, primarily driven by lower customer churn with higher retail sales activity and the growing work-from-home trend in the wake of the COVID-19 pandemic.
Segment Results
Revenues from Bell Wireless inched up 0.3% year over year to C$2,318 million on higher product revenues. Service revenues slipped 4.3% to C$1,575 million, primarily due to lower roaming revenues from infrequent travel with reduced data overage from higher adoption of unlimited plans. Product revenues increased 11.9% to C$743 million, driven by robust sales of consumer electronics at The Source, a Canadian consumer electronics company, coupled with higher online shopping amid pandemic restrictions.
Bell Wireline revenues slid 0.8% year over year to C$3,032 million. Service revenues decreased 0.4% to C$2,911 million due to declines in legacy voice, data and satellite TV services as well as weak business service solutions sales. Product revenues dropped 10.4% to C$121 million due to a fall in data equipment sales to large enterprise customers and delays in customer spending, considering the current economic volatility.
Bell Media generated revenues of C$628 million, down 16.4% year over year due to soft advertising and subscriber revenues. Advertising revenues declined materially on tepid advertiser spending across all platforms like TV, radio, out of home and digital due to the COVID-19 pandemic.
Other Details
Overall, adjusted EBITDA was C$2,454 million, down 4.4% year over year. This was due to 4.4% decline at Bell Wireless, 1.6% at Bell Wireline and 21.2% at Bell Media. Adjusted EBITDA margin contracted to 42.4% from 43.2%.
Cash Flow & Liquidity
In the first nine months of 2020, BCE generated C$6,123 million of cash from operating activities compared with C$5,867 million in the prior-year period. Free cash flow for the same time frame was C$3,256 million compared with C$2,864 million in the year-ago period.
As of Sep 30, the company had C$1,679 million ($1,256.2 million) in cash and cash equivalents with C$24,914 million ($18,640.8 million) of long-term debt compared with the respective tallies of C$1,547 million and C$25,024 million at the end of the previous quarter.
2020 Outlook
Due to COVID-19-releated uncertainties, BCE withdrew (on May 6) its 2020 financial guidance, earlier announced on Feb 6. Nevertheless, the company’s underlying business fundamentals remain strong. Its strong liquidity position, underpinned by a healthy balance sheet, substantial free cash flow generation and access to the debt and bank capital markets, is expected to provide financial flexibility to execute its planned capital expenditures with sustained dividend payments in the near term.
Conversion rate used:
C$1 = $0.750449 (period average from Jul 1, 2020 to Sep 30, 2020)
C$1 = $0.748205 (as of Sep 30, 2020)
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.32% due to these changes.
VGM Scores
Currently, BCE has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, BCE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is BCE (BCE) Up 10% Since Last Earnings Report?
A month has gone by since the last earnings report for BCE (BCE - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BCE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BCE Q3 Earnings Surpass Estimates, Revenues Decline Y/Y
BCE reported disappointing third-quarter 2020 results with both the bottom and the top line deteriorating on a year-over-year basis.
Net Income
Net earnings in the September quarter declined 20.2% year over year to C$692 million or C$0.77 per share. This deterioration was caused by higher other expenses and lower adjusted EBITDA on the back of elevated depreciation and amortization.
Adjusted net earnings came in at C$712 million ($534.3 million) or C$0.79 (59 cents) per share compared with C$812 million or C$0.91 per share in the prior-year quarter. Nevertheless, the bottom line beat the Zacks Consensus Estimate by a penny.
Revenues
This Canada-based telecommunications company’s total operating revenues dipped 2.6% year over year to C$5,787 million ($4,342.8 million). The downtick was mainly due to the adverse impact of the COVID-19 pandemic on BCE’s wireless roaming volumes, which induced reduced spending by business customers with sluggish demand for media advertising. The top line, however, surpassed the consensus estimate of $4,322 million.
Service revenues declined 4.2% to C$4,924 million on lower year-over-year wireless service and media revenues. Product revenues increased 8% to C$863 million, primarily driven by lower customer churn with higher retail sales activity and the growing work-from-home trend in the wake of the COVID-19 pandemic.
Segment Results
Revenues from Bell Wireless inched up 0.3% year over year to C$2,318 million on higher product revenues. Service revenues slipped 4.3% to C$1,575 million, primarily due to lower roaming revenues from infrequent travel with reduced data overage from higher adoption of unlimited plans. Product revenues increased 11.9% to C$743 million, driven by robust sales of consumer electronics at The Source, a Canadian consumer electronics company, coupled with higher online shopping amid pandemic restrictions.
Bell Wireline revenues slid 0.8% year over year to C$3,032 million. Service revenues decreased 0.4% to C$2,911 million due to declines in legacy voice, data and satellite TV services as well as weak business service solutions sales. Product revenues dropped 10.4% to C$121 million due to a fall in data equipment sales to large enterprise customers and delays in customer spending, considering the current economic volatility.
Bell Media generated revenues of C$628 million, down 16.4% year over year due to soft advertising and subscriber revenues. Advertising revenues declined materially on tepid advertiser spending across all platforms like TV, radio, out of home and digital due to the COVID-19 pandemic.
Other Details
Overall, adjusted EBITDA was C$2,454 million, down 4.4% year over year. This was due to 4.4% decline at Bell Wireless, 1.6% at Bell Wireline and 21.2% at Bell Media. Adjusted EBITDA margin contracted to 42.4% from 43.2%.
Cash Flow & Liquidity
In the first nine months of 2020, BCE generated C$6,123 million of cash from operating activities compared with C$5,867 million in the prior-year period. Free cash flow for the same time frame was C$3,256 million compared with C$2,864 million in the year-ago period.
As of Sep 30, the company had C$1,679 million ($1,256.2 million) in cash and cash equivalents with C$24,914 million ($18,640.8 million) of long-term debt compared with the respective tallies of C$1,547 million and C$25,024 million at the end of the previous quarter.
2020 Outlook
Due to COVID-19-releated uncertainties, BCE withdrew (on May 6) its 2020 financial guidance, earlier announced on Feb 6. Nevertheless, the company’s underlying business fundamentals remain strong. Its strong liquidity position, underpinned by a healthy balance sheet, substantial free cash flow generation and access to the debt and bank capital markets, is expected to provide financial flexibility to execute its planned capital expenditures with sustained dividend payments in the near term.
Conversion rate used:
C$1 = $0.750449 (period average from Jul 1, 2020 to Sep 30, 2020)
C$1 = $0.748205 (as of Sep 30, 2020)
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.32% due to these changes.
VGM Scores
Currently, BCE has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, BCE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.