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Why Is Rogers Communication (RCI) Up 4.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Rogers Communication (RCI - Free Report) . Shares have added about 4.1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Rogers Communications reported third-quarter 2022 adjusted earnings of 64 cents per share, which decreased 21.5% year over year and missed the Zacks Consensus Estimate for earnings by 7.25%.
Quarterly revenues of $2.86 billion beat the consensus mark by 2.54%.
In domestic currency (Canadian dollar), adjusted earnings decreased 18.4% year over year to C$0.84 per share. Total revenues increased 2.1% year over year, reaching C$3.74 billion, driven primarily by revenue growth in its Wireless and Media businesses.
Excluding the impact of the July network outage-related credits, total revenues and total service revenues would have increased 6% and 7%, respectively.
Wireless Details
Wireless (60.6% of total revenues) increased 2.3% from the year-ago quarter’s levels to C$2.26 billion.
Service revenues increased 3.2% to C$1.76 billion, driven by higher roaming revenues associated with increased traveling and a larger mobile phone subscriber base.
Equipment revenues were down 0.6% to C$506 million due to fewer device upgrades by existing subscribers and fewer of new subscribers purchasing devices.
Monthly mobile phone ARPU was C$56.8, down 2.3% year over year, as a result of the credits granted to subscribers relating to the July network outage. Excluding the impact of the July network outage-related credits, mobile phone ARPU would have increased by 3% this quarter, reflecting continued improvements in roaming revenues.
As of Sep 30, 2022, the prepaid subscriber base totaled almost 1.26 million, highlighting an addition of 75K subscribers from the year-ago quarter’s levels. The monthly churn rate was 4.77% compared with 4.04% in the year-ago quarter.
As of Sep 30, 2022, the postpaid wireless subscriber base totaled 9.19 million, up 493K from the year-ago quarter’s levels. The upside can be attributed to strong base management, low postpaid mobile phone churn and increased market activity. The monthly churn rate was 0.97% compared with 0.85% in the year-ago quarter.
Segment operating expenses increased 6% from the year-ago quarter’s levels to C$1.17 billion.
Adjusted EBITDA decreased 1.3% year over year to C$1.09 billion. Adjusted EBITDA margin contracted 180 basis points (bps) on a year-over-year basis to 48.2%.
Cable Details
Cable revenues (26% of total revenues) declined 4% year over year to C$975 million. Service revenues declined 4% year over year to C$968 million due to credits granted to subscribers relating to the July network outage and declines in Home Phone and Smart Home Monitoring subscriber bases.
As of Sep 30, 2021, the retail Internet subscriber count was nearly 2.27 million, up 69K from the year-ago quarter’s levels.
As of Sep 30, 2022, total Smart Home Monitoring subscribers reached 102K, highlighting a loss of 15K subscribers from the year-ago quarter’s reported figure. The total Home Phone subscriber count was nearly 854K, down 76K from the year-ago quarter’s figure.
The customer relationship net losses and lower retail Internet net additions this quarter were the result of the July network outage combined with increased competitive promotional activity.
Equipment revenues decreased 13% year over year to C$7 million. Segment operating expenses increased 2% year over year at C$510 million. Adjusted EBITDA decreased 9.9% year over year to C$465 million. Adjusted EBITDA margin contracted 310 bps on a year-over-year basis to 47.7%.
Media Details
Media (14.2% of total revenues) revenues increased 12.1% from the year-ago quarter to C$530 million, driven by the higher Toronto Blue Jays revenues, primarily as a result of increased attendance from strong team performance and the availability for fan attendance to reach full capacity at the Rogers Centre as COVID-19 restrictions were removed.
Segment operating expenses increased 3% year over year to C$454 million, primarily attributed to higher programming, production costs and other general operating costs.
Consolidated Results
Operating costs increased 4.5% to C$2.16 billion. As a percentage of revenues, operating costs expanded 140 bps to 5707%.
Adjusted EBITDA decreased 1.1% year over year to C$1.58 billion. Adjusted EBITDA margin contracted 140 bps to 42.3%.
Balance Sheet & Cash Flow Details
As of Sep 30, 2022, Rogers Communications had $3.7 billion of available liquidity, including $0.7 billion in cash and cash equivalents and a combined $3 billion available under the bank credit facility.
The company had $3.8 billion of available liquidity, including $0.7 billion in cash and cash equivalents and a combined $3.1 billion available under the bank credit facility at the end of the previous quarter.
Cash provided by operating activities decreased 7.8% year over year to C$1.21 billion. Free cash flow decreased 45% year over year to C$279 million.
Rogers Communications paid out C$253 million in dividends in the reported quarter and declared a $0.50 per share dividend on Nov 8, 2022.
The company ended the third quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 3.5 compared with the previous quarter’s debt leverage ratio of 3.2.
Guidance
For full-year 2022, Roger expects total service revenue growth in the range of 6-8% and adjusted EBITDA growth in the range of 8-10%.
Free cash flow excluding Shaw financing is expected in the range of $1.9-2.1 billion.
Key Developments in Q3
On Mar 15, 2021, Rogers announced an agreement with Shaw Communications to acquire all of Shaw's issued and outstanding Class A participating shares and Class B non-voting participating shares for a price of $40.50 per share in cash with the exception of the shares held by the Shaw Family Living Trust, the controlling shareholder of Shaw, and related persons. The transaction is valued at approximately $26 billion, including the assumption of approximately $6 billion of Shaw debt.
Rogers, Shaw, and the Shaw Family Living Trust have agreed to extend the outside date for the transaction to Dec 31, 2022 with a provision that the outside date may be further extended to Jan 31, 2023 at the option of Rogers or Shaw.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Rogers Communication has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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
Rogers Communication has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Rogers Communication belongs to the Zacks Cable Television industry. Another stock from the same industry, Charter Communications (CHTR - Free Report) , has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Charter reported revenues of $13.55 billion in the last reported quarter, representing a year-over-year change of +3.1%. EPS of $7.38 for the same period compares with $6.50 a year ago.
For the current quarter, Charter is expected to post earnings of $8.42 per share, indicating a change of -5.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.
Charter has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is Rogers Communication (RCI) Up 4.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Rogers Communication (RCI - Free Report) . Shares have added about 4.1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Rogers Communications Q3 Earnings Miss, Revenues Beat
Rogers Communications reported third-quarter 2022 adjusted earnings of 64 cents per share, which decreased 21.5% year over year and missed the Zacks Consensus Estimate for earnings by 7.25%.
Quarterly revenues of $2.86 billion beat the consensus mark by 2.54%.
In domestic currency (Canadian dollar), adjusted earnings decreased 18.4% year over year to C$0.84 per share. Total revenues increased 2.1% year over year, reaching C$3.74 billion, driven primarily by revenue growth in its Wireless and Media businesses.
Excluding the impact of the July network outage-related credits, total revenues and total service revenues would have increased 6% and 7%, respectively.
Wireless Details
Wireless (60.6% of total revenues) increased 2.3% from the year-ago quarter’s levels to C$2.26 billion.
Service revenues increased 3.2% to C$1.76 billion, driven by higher roaming revenues associated with increased traveling and a larger mobile phone subscriber base.
Equipment revenues were down 0.6% to C$506 million due to fewer device upgrades by existing subscribers and fewer of new subscribers purchasing devices.
Monthly mobile phone ARPU was C$56.8, down 2.3% year over year, as a result of the credits granted to subscribers relating to the July network outage. Excluding the impact of the July network outage-related credits, mobile phone ARPU would have increased by 3% this quarter, reflecting continued improvements in roaming revenues.
As of Sep 30, 2022, the prepaid subscriber base totaled almost 1.26 million, highlighting an addition of 75K subscribers from the year-ago quarter’s levels. The monthly churn rate was 4.77% compared with 4.04% in the year-ago quarter.
As of Sep 30, 2022, the postpaid wireless subscriber base totaled 9.19 million, up 493K from the year-ago quarter’s levels. The upside can be attributed to strong base management, low postpaid mobile phone churn and increased market activity. The monthly churn rate was 0.97% compared with 0.85% in the year-ago quarter.
Segment operating expenses increased 6% from the year-ago quarter’s levels to C$1.17 billion.
Adjusted EBITDA decreased 1.3% year over year to C$1.09 billion. Adjusted EBITDA margin contracted 180 basis points (bps) on a year-over-year basis to 48.2%.
Cable Details
Cable revenues (26% of total revenues) declined 4% year over year to C$975 million. Service revenues declined 4% year over year to C$968 million due to credits granted to subscribers relating to the July network outage and declines in Home Phone and Smart Home Monitoring subscriber bases.
As of Sep 30, 2021, the retail Internet subscriber count was nearly 2.27 million, up 69K from the year-ago quarter’s levels.
As of Sep 30, 2022, total Smart Home Monitoring subscribers reached 102K, highlighting a loss of 15K subscribers from the year-ago quarter’s reported figure. The total Home Phone subscriber count was nearly 854K, down 76K from the year-ago quarter’s figure.
The customer relationship net losses and lower retail Internet net additions this quarter were the result of the July network outage combined with increased competitive promotional activity.
Equipment revenues decreased 13% year over year to C$7 million.
Segment operating expenses increased 2% year over year at C$510 million.
Adjusted EBITDA decreased 9.9% year over year to C$465 million. Adjusted EBITDA margin contracted 310 bps on a year-over-year basis to 47.7%.
Media Details
Media (14.2% of total revenues) revenues increased 12.1% from the year-ago quarter to C$530 million, driven by the higher Toronto Blue Jays revenues, primarily as a result of increased attendance from strong team performance and the availability for fan attendance to reach full capacity at the Rogers Centre as COVID-19 restrictions were removed.
Segment operating expenses increased 3% year over year to C$454 million, primarily attributed to higher programming, production costs and other general operating costs.
Consolidated Results
Operating costs increased 4.5% to C$2.16 billion. As a percentage of revenues, operating costs expanded 140 bps to 5707%.
Adjusted EBITDA decreased 1.1% year over year to C$1.58 billion. Adjusted EBITDA margin contracted 140 bps to 42.3%.
Balance Sheet & Cash Flow Details
As of Sep 30, 2022, Rogers Communications had $3.7 billion of available liquidity, including $0.7 billion in cash and cash equivalents and a combined $3 billion available under the bank credit facility.
The company had $3.8 billion of available liquidity, including $0.7 billion in cash and cash equivalents and a combined $3.1 billion available under the bank credit facility at the end of the previous quarter.
Cash provided by operating activities decreased 7.8% year over year to C$1.21 billion. Free cash flow decreased 45% year over year to C$279 million.
Rogers Communications paid out C$253 million in dividends in the reported quarter and declared a $0.50 per share dividend on Nov 8, 2022.
The company ended the third quarter with a debt leverage ratio (adjusted net debt/adjusted EBITDA) of 3.5 compared with the previous quarter’s debt leverage ratio of 3.2.
Guidance
For full-year 2022, Roger expects total service revenue growth in the range of 6-8% and adjusted EBITDA growth in the range of 8-10%.
Free cash flow excluding Shaw financing is expected in the range of $1.9-2.1 billion.
Key Developments in Q3
On Mar 15, 2021, Rogers announced an agreement with Shaw Communications to acquire all of Shaw's issued and outstanding Class A participating shares and Class B non-voting participating shares for a price of $40.50 per share in cash with the exception of the shares held by the Shaw Family Living Trust, the controlling shareholder of Shaw, and related persons. The transaction is valued at approximately $26 billion, including the assumption of approximately $6 billion of Shaw debt.
Rogers, Shaw, and the Shaw Family Living Trust have agreed to extend the outside date for the transaction to Dec 31, 2022 with a provision that the outside date may be further extended to Jan 31, 2023 at the option of Rogers or Shaw.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Rogers Communication has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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
Rogers Communication has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Rogers Communication belongs to the Zacks Cable Television industry. Another stock from the same industry, Charter Communications (CHTR - Free Report) , has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Charter reported revenues of $13.55 billion in the last reported quarter, representing a year-over-year change of +3.1%. EPS of $7.38 for the same period compares with $6.50 a year ago.
For the current quarter, Charter is expected to post earnings of $8.42 per share, indicating a change of -5.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.
Charter has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.