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Shaw (SJR) Down 1.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Shaw Communications (SJR - Free Report) . Shares have lost about 1.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Shaw due for a breakout? 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 catalysts.

Shaw Communications Q1 Earnings Beat, Revenues Rise Y/Y

Shaw Communications reported first-quarter fiscal 2022 adjusted earnings from continuing operations of 31 cents per share, beating the Zacks Consensus Estimate by 3.33%.

Total revenues came in at $1.10 billion, beating the consensus mark by 0.49%.

In domestic currency, Shaw reported earnings of C$0.39 per share, up 25.8% year over year. Total revenues increased 1.2% year over year to C$1.39 billion.

Segmental Update

Wireline revenues (76.3% of total revenues) increased 0.1% on a year-over-year basis to C$1.06 billion. Wireline customers declined nearly 78,100 in the reported quarter compared with a loss of nearly 100,900 in the year-ago quarter.

Wireline - Consumer revenues decreased 1.6% to C$896 million. Wireline - Business revenues of C$161 million were up 11% year over year.

Wireless revenues (24% of total revenues) increased 4.7% on a year-over-year basis to C$332 million. Shaw added 55,600 new wireless customers in the reported quarter.

Wireless division currently operates in Ontario, Alberta and British Columbia, covering roughly 50% of the Canadian population.

Wireless - Service revenues (72% of total segment revenues) were up 11.2% from the year-ago quarter to C$239 million.

ABPU fell 9.4% year over year to C$38.67. ARPU declined 3.4% from the year-ago quarter to C$36.95.

Wireless - Equipment revenues (28% of total revenues) decreased 8.8% year over year to C$93 million.

Operating Details

Operating, general and administrative expenses declined 1.3% year over year to C$753 million.

In first-quarter fiscal 2022, adjusted EBITDA grew 4.3% year over year to C$633 million. Adjusted EBITDA margin expanded 140 bps on a year-over-year basis to 45.7%.

Segment-wise, Wireline’s adjusted EBITDA decreased 1.5% to C$524 million. The Wireline segment’s adjusted EBITDA margin contracted 80 bps on a year-over-year basis to 49.6%.

Wireless adjusted EBITDA surged 45.3% to C$109 million. The Wireless segment’s adjusted EBITDA margin increased from 34.9% to 45.6%.

Cash Flow Details

As of Nov 30, 2021, Shaw Communications had cash worth $292 million. The company’s net debt position was C$5.67 billion.

Moreover, the company’s net debt leverage ratio was 2.2X, below management’s optimal range of 2.5X-3X.

In the quarter under review, capital expenditures were C$225 million compared with C$227 million in the year-ago quarter.

Free cash flow was C$236 million compared with C$225 million in the year-ago quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Shaw has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, 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 A. 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, Shaw has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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